USD/JPY Forex Technical Analysis – Counter-Trend Buyers Hoping for Test of 108.350 – 108.230

The Dollar/Yen is edging lower on Friday after posting a volatile two-sided trade the previous session. The Forex pair is basically tracking the movement in U.S. Treasury yields that are inching a little higher on Friday.

The Dollar/Yen was in a position to test a key retracement zone early Thursday when the U.S. government released a pair of strong economic reports that spiked yields higher, sending investors into the U.S. Dollar.

At 07:23 GMT, the USD/JPY is trading 108.827, down 0.092 or -0.08%.

According to the U.S. government, economic activity surged to start 2021. The U.S. Commerce Department said first-quarter gross domestic product rose 6.4%, compared to the 6.5% expected by economists polled by Dow Jones.

The Labor Department, meanwhile, reported that initial jobless claims last week totaled 553,000, just above the 528,000 estimate issued by Dow Jones.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 107.479 will signal a resumption of the downtrend. A move through 110.966 will change the main trend to up.

The minor trend is up. This is controlling the momentum. A trade through 108.435 will change the minor trend to down.

The short-term range is 110.966 to 107.479. Its retracement zone at 109.223 to 109.634 is potential resistance. Sellers are going to try to form a secondary lower top. Buyers are going to try to breakout over the upper or Fibonacci level.

The first minor range is 109.961 to 107.479. Its 50% level at 108.720 is potential support.

The second minor range is 107.479 to 109.221. Its 50% level at 108.350 is additional support. Buyers may show up on a pullback into this level in the hopes of forming a secondary higher bottom.

The minor 50% level at 108.350 and the long-term Fibonacci level at 108.230 form a potential support cluster.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Friday is likely to be determined by trader reaction to 108.720.

Bullish Scenario

A sustained move over 108.720 will indicate the presence of buyers. If this move generates enough upside momentum then look for a test of 109.221 – 109.223.

Bearish Scenario

A sustained move under 108.720 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the support cluster at 108.350 to 108.230.

For a look at all of today’s economic events, check out our economic calendar.