USD/JPY Forex Technical Analysis – Looking for Short-Term Correction into 111.244

Lower demand for risky assets and a drop in U.S. Treasury yields is driving the Dollar/Yen lower for a second session. Investors are reacting to the lack of progress in U.S.-China trade negotiations and general nervousness ahead of Thursday’s European Central Bank interest rate and monetary policy decisions. We’re also likely looking at position-squaring ahead of Friday’s U.S. Non-Farm Payrolls report.

At 01:33 GMT, the USD/JPY is trading 111.636, down 0.139 or -0.12%.

Traders are a little nervous about the jobs report after ADP and Moody’s Analytics said job creation at the company level slowed in February. According to the ADP Non-Farm Employment Change report released on Wednesday, private companies added 183,000 workers for the month, close to the 185,000 forecast. January’s report was revised higher from 213,000 to 300,000.

Daily Technical Analysis

The main trend is up according to the daily swing chart. A trade through 112.137 will signal a resumption of the uptrend. The USD/JPY isn’t in a position to turn the trend to down, but there is room for a 50% to 61.8% correction.

The short-term range is 110.350 to 112.137. Its retracement zone at 111.244 to 111.033 is the primary downside target. Since the main trend is up, buyers are likely to come in on a test of this area.

Daily Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to a resistance cluster at 111.850, 111.887 and 111.898.

Bullish Scenario

Overcoming and sustaining a rally over 111.898 will indicate the presence of buyers. The next upside target is a minor downtrending Gann angle at 112.012. This is the last potential resistance angle before the 112.137 main top.

Bearish Scenario

A sustained move under 111.850 will signal the presence of sellers. The daily chart indicates there is plenty of room to the downside with the first target the 50% level at 111.244. Look for a technical bounce on the first test of this level.

If 111.244 fails as support then look for the selling to extend into an uptrending Gann angle at 111.100, followed by the Fibonacci level at 111.033.