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James Hyerczyk

The Dollar/Yen is trading nearly flat on Friday in limited trading. The Forex pair is also trading inside yesterday’s wide range which suggests investor indecision and impending volatility.

On Thursday, the Forex pair spiked higher after a couple of days of rangebound trading after U.S. Treasury yields jumped in response to comments made by European Central Bank President Mario Draghi.

The ECB chief fueled a reversal to the upside in German bond and U.S. bond yields after saying the chances of a recession in the Euro Zone were small. U.S. investors read this to mean the Fed may not be as dovish as expected when it makes its monetary policy and interest rate decisions on July 31.

At 06:48 GMT, the USD/JPY is trading 108.611, down 0.028 or -0.04%.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. The main trend will change to up on a trade through 108.991. A move through 107.212 will signal a resumption of the downtrend.

The minor trend is up. It turned up on Thursday when buyers took out 108.375. This shifted momentum to the upside.

The main range is 110.677 to 106.775. Its retracement zone at 108.726 to 109.186 is the primary upside target. This zone is controlling the near-term direction of the USD/JPY. It is also resistance. It stopped a rally at 108.991 on July 10. On Thursday, its 50% or lower level at 108.726 stopped the rally.

The short-term range is 108.991 to 107.212. Its retracement zone at 108.311 to 108.102 is support. The intermediate-term range is 106.775 to 108.991. Its retracement zone at 107.883 to 107.622 is additional support.


Daily Swing Chart Technical Forecast

Based on yesterday’s high and today’s price action, the direction of the USD/JPY on Friday is likely to be determined by trader reaction to the main 50% level at 108.726.

Bullish Scenario

A sustained move over 108.726 will indicate the presence of buyers. If this creates enough upside momentum then look for a rally into its main top at 108.991, followed closely by the main Fibonacci level at 109.186. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 108.726 will signal the presence of sellers. If this generates enough downside momentum then look for a break into the short-term Fibonacci level at 108.311, followed closely by the short-term 50% level at 108.102.

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