USD/JPY Forex Technical Analysis – July 11, 2019 Forecast

The Dollar/Yen is plunging early Thursday, as investors price in the possibility of a 50-basis point rate cut by the U.S. Federal Reserve in late July, on the back of surprisingly dovish comments from Fed Chairman Jerome Powell. U.S. Treasury yields are falling, tightening the spread between U.S. Government bond yields and Japanese Government bond yields. This is helping to make the U.S. Dollar a less-desirable investment.

At 04:44 GMT, the USD/JPY is trading 107.957, down 0.508 or -0.47%.

The USD/JPY posted a potentially bearish closing price reversal top on Wednesday after Powell appeared to greenlight a rate cut for July 31, while once again vowing to “act as appropriate” to ensure the world’s biggest economy will be able to sustain a more-than-decade-long expansion.

The price action suggests that Powell may have put a half-a-point rate cut back on the table after he dampened the occurrence with hawkish comments on June 25.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside following Wednesday’s potentially bearish closing price reversal top and its subsequent confirmation earlier today.

A trade through 108.991 will negate the chart pattern and signal a resumption of the uptrend. The main trend will change to down on a move through 107.534. This could trigger another steep break with the next target the June 25 bottom at 106.775.

The main range is 110.677 to 106.775. Its retracement zone at 108.726 to 109.186 is resistance. This zone stopped the rally on Wednesday at 108.991.

The short-term range is 106.775 to 108.991. Its retracement zone at 107.883 to 107.622 is the first downside target.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the USD/JPY on Thursday is likely to be determined by trader reaction to the short-term 50% level at 107.883.

Bullish Scenario

A sustained move over 107.883 will indicate the return of buyers. If this move creates enough upside momentum then look for a 50% retracement of the first leg down from 108.991. This could trigger a rally back to 108.426. Sellers could come in on a test of this level.

Bearish Scenario

Taking out 107.883 will signal that the selling is getting stronger. The first target is the short-term Fibonacci level at 107.622, followed closely by the main bottom at 107.534.

The trend will change to down on a trade through 107.534. This could trigger an acceleration to the downside with the next target the main bottom at 106.775.

Overview

The USD/JPY hit its first objective earlier today at 107.883. Since the trend is up, buyers came in to stop the selling. They will be trying to produce a secondary higher bottom.