USD/JPY Forex Technical Analysis – Consolidating as Fed Speakers Dampen Pivot Expectations

The Dollar/Yen is edging lower on Friday after moving higher the previous session. Nonetheless, the Forex pair is still in a position to post a modest gain for the week, following the previous week’s steep sell-off.

After a bearish start to the week, the Dollar/Yen rebounded as hawkish remarks from several Federal Reserve policymakers and stronger-than-expected retail sales data have put the brakes on a pivot by the central bank that was brought forward by signs of cooling inflation.

At 11:38 GMT, the USD/JPY is trading 139.886, down 0.335 or -0.24%. On Thursday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $66.56, down $0.37 or -0.55%.

Treasury Yields Edge Higher

Overnight, U.S. Treasury yields are moving higher as Federal Reserve officials suggested interest rates would go higher still, after recent economic data had given investors hope about inflation easing.

Yields may have been boosted by hawkish comments from Federal Reserve Bank of Minneapolis President Neel Kashkari. He said rate hikes should continue until there is certainty that inflation has stopped climbing and that this point had not been reached yet.

Housing Data on Tap

Investors will also gain fresh insights into the housing sector, which is often used as a barometer for the state of the wider U.S. economy, on Friday, when existing home sales data is published.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 137.684 will signal a resumption of the downtrend. A move through 148.849 will change the main trend to up. This is highly unlikely, but there is room for a technical retracement of the recent sell-off.

The main range is 126.362 to 151.945. Its retracement zone at 139.154 to 136.135 is support. This zone stopped the selling at 137.684 on Tuesday.

On the upside, the nearest resistance is 141.179, followed by 143.913.

Daily Swing Chart Technical Forecast

Trader reaction to 139.154 is likely to determine the direction of the USD/JPY on Friday.

Bullish Scenario

A sustained move over 139.154 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into 141.179. Overtaking this level could trigger an acceleration to the upside with 143.913.

Bearish Scenario

A sustained move under 139.154 will signal the presence of sellers. This could trigger a move into the minor bottom at 137.684, followed by the main Fibonacci level at 136.135.