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USD/JPY Forex Technical Analysis – June 26, 2019 Forecast

Based on the early price action, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at 107.427. This angle has been guiding the Forex pair lower since May 21. Another way to look at the USD/JPY:  Strength over 107.427, Weakness under 107.118. 
James Hyerczyk
USD/JPY

The Dollar/Yen is trading higher on Wednesday after U.S. Federal Reserve Chairman Jerome Powell dampened expectations for a potential interest rate cut. U.S. Treasury yields firmed on the comments making the U.S. Dollar a more desirable asset and tightening the spread between U.S. Government bonds and Japanese Government bonds (JGBs).

At 06:05 GMT, the USD/JPY is trading 107.422, up 0.258 or +0.25%.

Powell shook up the financial markets on Tuesday when he said the Fed is assessing whether current economic uncertainties call for lower rates. Powell noted the Fed will take a wait-and-see approach given how rapid recent economic changes have been, but added the Fed is “insulated from short-term political interests.”

Traders read Powell’s comments as hawkish and the financial markets reversed their nearly weeklong direction to reflect this change in tone from last week’s Federal Reserve monetary policy meeting. It should be noted that the Fed never said it was cutting rates in July. However, the financial markets built in a 100% chance of a rate cut at the Fed’s July 31 meeting.

Daily USD/JPY

Daily Technical Analysis

The main trend is down according to the daily swing chart. A trade through 106.775 will signal a resumption of the downtrend and put the USD/JPY back on course for a test of the March 26, 2018 main bottom at 104.600.

The main trend will change to up on a trade through 108.728. This is not likely today, but there is room for a short-term retracement of the recent selloff.

The main range is 105.180 to 112.405. Its retracement zone at 107.940 to 108.793 is resistance.

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Daily Technical Forecast

Based on the early price action, the direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the downtrending Gann angle at 107.427. This angle has been guiding the Forex pair lower since May 21.

Bullish Scenario

A sustained move over 107.427 will indicate the buying is getting stronger. This could create the upside momentum needed to challenge the main Fibonacci level at 107.940. Overtaking this level could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 107.427 will signal the return of sellers. They could drive the USD/JPY into a long-term uptrending angle at 107.118. If this fails then look for a test of the new minor bottom at 106.775.

Taking out 106.775 will signal a resumption of the downtrend. This could trigger a further break into the next uptrending Gann angle at 106.149. This is the last potential support angle before the 104.600 main bottom.

Overview

Another way to look at the USD/JPY:  Strength over 107.427, Weakness under 107.118.

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