James Hyerczyk
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The Dollar/Yen is trading higher on Wednesday after fully recovering from last week’s steep sell-off. The rally is being fueled by increasing demand for risky assets, led by the strong recovery in the U.S. stock market. Weak economic data from Japan is also helping to drive the rally as investors continue to bet on the U.S. economy recovering at a much faster pace than the Japanese economy.

At 07:33 GMT, the USD/JPY is trading 110.874, up 0.18% or +0.18%.

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Later in the session at 13:45 GMT, USD/JPY traders will get a chance to see just how well the U.S. economy is recovering with the release of Flash Manufacturing and Services PMI data.

Flash Manufacturing PMI is expected to come in at 61.5, down from the previously reported 62.1. Flash Services PMI is expected to come in at 70.0, down from last month’s 70.4 reading.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 110.823 earlier in the session reaffirmed the uptrend. A move through 109.717 will change the main trend to down.

The USD/JPY is currently trading on the strong side of the short-term retracement zone at 109.634 to 109.223, making this area new support.


Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to 110.671.

Bullish Scenario

A sustained move over 110.671 will indicate the presence of buyers. This could trigger a rally into the March 31 main top at 110.966.

The daily chart indicates that there is plenty of room to the upside over 110.966 with the March 24, 2020 main top the next major target. Depending on the buying volume, we could see either an acceleration to the upside or a steady climb.

Bearish Scenario

A sustained move under 110.671 will signal the presence of sellers. The first potential downside target is a minor pivot at 110.314.

For a look at all of today’s economic events, check out our economic calendar.
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