The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the minor pivot at 109.957.
The Dollar/Yen is under pressure early Tuesday despite a slight rise in U.S. Treasury yields. The price action in the Forex pair has been choppy the last couple of days since the release of Friday’s disappointing U.S. Non-Farm Payrolls report. Some traders are blaming the strength in the Japanese Yen on worries about a weakening global economy.
At 03:14 GMT, the USD/JPY is trading 109.773, down 0.083 or -0.08%.
In economic news, Japan’s household spending grew less than expected in July as a resurgence in COVID-19 cases hindered consumer activity, throwing broader economic recovery prospects into doubt.
The main trend is up according to the daily swing chart. A trade through 109.590 will change the main trend to down. A move through 110.420 will signal a resumption of the uptrend.
On the downside, the next downside target and potential support zone is 109.569 to 109.076.
On the upside, the first resistance is a minor pivot at 109.957, followed by a short-term retracement zone at 110.185 to 110.531.
The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the minor pivot at 109.957.
A sustained move under 109.957 will indicate the presence of sellers. The first downside target is the support cluster at 109.590 to 109.569. Look for a technical bounce on the first test of this area.
The USD/JPY should continue to weaken on a sustained move under 109.569. The first downside target is the minor bottom at 109.414. This price is a potential trigger point for an acceleration into another support cluster at 109.114 to 109.076.
A sustained move over 109.957 will signal the presence of buyers. The next move should lead to a labored rally with potential upside targets lined up at 110.185, 110.420 and 110.531.
James Hyerczyk is a U.S. based seasoned technical analyst and educator with over 40 years of experience in market analysis and trading, specializing in chart patterns and price movement. He is the author of two books on technical analysis and has a background in both futures and stock markets.