FXEMPIRE
All
Ad
Corona Virus
Stay Safe, FollowGuidance
World
101,072,802Confirmed
2,174,392Deaths
73,039,753Recovered
Fetching Location Data…
Advertisement
Advertisement
James Hyerczyk
USD/JPY

The Dollar/Yen is edging lower early Wednesday as a pullback in U.S. Treasury yields pushed the dollar below 104 Japanese Yen in Asia though moves were slight as dollar bears’ conviction wavered.

The dollar started to weaken on Tuesday as a retreat in U.S. Treasury yields sucked the upside momentum from its recent technical rebound that changed the trend to up after a prolonged break. The price action, however, suggests investors are cautiously resuming bets that the greenback is poised to continue its recent price slide.

Advertisement
Know where the Market is headed? Take advantage now with 

75% of retail CFD investors lose money

At 07:54 GMT, the USD/JPY is trading 103.644, down 0.099 or -0.10%.

The weeklong rally in the Dollar/Yen was primarily driven by a widening in the spread between U.S. Government bond yields and Japanese Government bond yields. The move made the U.S. Dollar a more attractive investment. This is known as trading the yield differential.

Trading the yield differential was very popular prior to the start of the pandemic when U.S. rates were much higher than Japanese Yen rates. Since the Fed lowered rates to near zero, the trade has been nearly non-existent. However, the surge in Treasury yields has investment professionals debating whether we’re going back toward trading the interest rate differentials.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 104.398 will reaffirm the uptrend. The main trend will change to down on a move through 102.593.

The minor range is 102.593 to 104.398. Its 50% level at 103.496 is currently being tested.

Any rally is likely to be labored because of a series of retracement level resistance at 104.135, 104.499 and 104.821. The USD/JPY starts to open up to the upside on a sustained move over 104.821.

Advertisement

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the USD/JPY will be determined by trader reaction to the pivot at 103.496.

Bullish Scenario

A sustained move over 103.496 will indicate the presence of buyers. If this move creates enough upside momentum then look for a rally into 104.135, followed by 104.398 and 104.499. This is not likely, however, without help from rising Treasury yields.

Bearish Scenario

A sustained move under 103.496 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into 102.593. This move would likely be fueled by a spike to the downside in Treasury yields.

Side Notes

Trader reaction to 103.496 is very important because buyers are trying to form a potentially bullish secondary bottom. The first rally from 102.593 was likely short-covering. The formation of a secondary higher bottom, however, usually indicates that real buyers are returning.

For a look at all of today’s economic events, check out our economic calendar.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US