USD/JPY Forex Technical Analysis – July 12, 2019 Forecast

The Dollar/Yen is trading lower early Friday after an early session rally failed to gain traction. Traders are reacting to slightly lower Treasury yields.

On Thursday, better-than-expected U.S. consumer inflation data led to a dramatic reversal to the upside. The unexpected jump in inflation in June helped temper the chances of a 50-basis point rate cut by the Fed in late July, fueling the short-covering rally. Nonetheless, based on the testimony by Fed Chair Jerome Powell on Wednesday, financial market traders are still pricing in a 100% chance of a 25-basis point rate cut at the end of the month.

At 06:40 GMT, the USD/JPY is trading 108.361, down 0.134 or -0.12%.

Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the formation of the potentially bearish closing price reversal top at 108.991 on July 10 and the subsequent confirmation of the chart pattern on Thursday.

A trade through 108.991 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through the 107.534 swing bottom.

The short-term range is 106.775 to 108.991. Its retracement zone at 107.883 to 107.662 is support. This zone stopped the selling on Thursday at 107.680, triggering the reversal to the upside.

The intermediate range is 110.677 to 106.775. Its retracement zone at 108.734 to 109.193 is resistance. This zone stopped the buying at 108.991.

The main range is 112.405 to 106.775. If the uptrend resumes through 108.991 then its retracement zone at 109.590 to 110.254 will become the primary upside target.

Daily Technical Forecast

Based on the early price action and the current price at 108.361, the direction of the USD/JPY the rest of the session on Friday is likely to be determined by trader reaction to the uptrending Gann angle at 108.400.

Bullish Scenario

A sustained move over 108.400 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to extend into the 50% level at 108.734, followed closely by the downtrending Gann angle at 108.843. This angle stopped the buying on July 10.

Taking out 108.843 will indicate the buying is getting stronger. This could trigger a rally into 108.991. Taking out this top could trigger a breakout into the Fibonacci level at 109.193.

Bearish Scenario

A sustained move under 108.400 will signal the presence of sellers. This could trigger an acceleration to the downside with the next target a 50% level at 107.883. This is followed by a support cluster at 107.622 to 107.588.