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James Hyerczyk
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USD/JPY

The Dollar/Yen is inching higher on Thursday, essentially mirroring the early movement in U.S. Treasury yields in the overnight session. The Forex pair is also hovering just below a major 50% level at 107.154. This level rejected buyers the previous session.

At 06:01 GMT, the USD/JPY is trading 107.059, up 0.045 or +0.04%.

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The dollar hit a seven-month high against the yen on Wednesday as an orderly rise in U.S. Treasury yields lent support ahead of a speech by Federal Reserve Chairman Jerome Powell that may determine the trend for global bond markets and currencies.

A chaotic sell-off in Treasuries from the start of the year on concerns that massive government spending to support the global economy may drive up inflation culminated in 10-year yields rising to a one-year high of 1.6140% last week.

The rapid in rise in Treasury yields also helped widen the spread between U.S. Government bonds and Japanese Government bonds, making the U.S. Dollar a more attractive investment.

Daily USD/JPY Long Term View

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 107.154 will signal a resumption of the uptrend.

The main trend will change to down on a move through 104.923. This is highly unlikely, but there’s always the possibility of a closing price reversal top just to alleviate some of the upside pressure. Any sharp break in Treasury yields will be the catalyst behind the sell-off.

The primary upside target is a long-term retracement zone at 107.154 to 108.230.

The current minor range is 104.923 to 107.154. Its 50% level at 106.039 is the primary downside target. This level will move up as the USD/JPY move higher.

Daily USD/JPY Short Term View
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Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday will be determined by trader reaction to the major 50% level at 107.154.

Bullish Scenario

A sustained move over 107.154 will indicate the buying is getting stronger. The first upside target is the July 20 top at 107.530. This is followed by the July 7 main top at 107.790.

Bearish Scenario

A sustained move under 107.154 will signal the return of sellers. If they can generate any meaningful downside pressure then look for a potential near-term break into its 50% target at 106.039.

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