USD/JPY Forex Technical Analysis – Crossing to Weak Side of 103.388 Pivot Puts Dollar/Yen in Bearish Position

The Dollar/Yen is inching lower on Monday as investors shed the safe-haven asset off news of President Trump relenting on a threat to block a COVID-19 aid bill in thin trading with many of the major players still on holiday until after the first of January.

Trump signed into law the $2.3 trillion pandemic aid and government spending package, officials said on Sunday night, averting a partial federal government shutdown.

At 07:31 GMT, the USD/JPY is trading 103.475, down 0.026 or -0.02%.

In other news, policymakers at the Bank of Japan were divided on how far they should go in examining yield curve control with some calling for a comprehensive review of the framework, a summary of opinions voiced at the December rate review showed on Monday.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 102.886 will signal a resumption of the downtrend. The main trend will change to up on a move through 104.751.

The minor range is 102.886 to 103.890. Its 50% level at 103.388 is support. It’s also controlling the near-term direction of the Forex pair.

The short-term range is 105.677 to 102.886. Taking out last week’s high at 103.890 could trigger a spike into its retracement zone at 104.282 to 104.611.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY the rest of the session on Monday is likely to be determined by trader reaction to 103.388.

Bearish Scenario

A sustained move under 103.388 will indicate the presence of sellers. If this move creates enough downside momentum then look for the weakness to possibly extend into the minor bottom at 102.886. We could see a steep break if this level fails as support.

Bullish Scenario

A sustained move over 103.388 will signal the presence of buyers. If this move generates enough upside momentum then look for the short-covering rally to possibly extend into the minor top at 103.890. If buyers can take out this level then look for a possible acceleration into the short-term retracement zone at 104.282 to 104.611.