USD/JPY Forex Technical Analysis – Minor Pivot at 108.851 Controlling Price Action

The Dollar/Yen is inching higher early Wednesday, hovering near-nine-month highs hit this week as traders await the release of the Fed’s interest rate and monetary policy decisions as well as the press conference by Chair Jerome Powell.

At 07:00 GMT, the USD/JPY is trading 109.110, up 0.104 or +0.10%.

Dollar/Yen investors will be paying close attention to the Fed’s meeting, to see if the U.S. central bank tweaks its interest rate outlook or signals how soon it might pare back its bond buying program. The Fed will release new economic and interest rate forecasts which could show Fed officials expect to raise rates by 2023.

Fed Chairman Jerome Powell will hold a press briefing after the second day of the meeting on Wednesday afternoon.

A dovish Fed should drive Treasury yields lower and this will tighten the spread between U.S. Government bond yields and Japanese Government yields. The move will boost demand for the Yen, while making the U.S. Dollar a less-desirable asset.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.362 will signal a resumption of the uptrend.

A trade through 104.923 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, the USD/JPY begins the session on Wednesday inside the window of time for a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 108.340 will change the minor trend to down and shift momentum to the downside. Taking out 109.286 will make 108.772 a new minor bottom.

The minor range is 108.340 to 109.362. Its 50% level at 108.851 is potential support.

The main retracement zone at 108.230 to 107.154 is controlling the longer-term direction of the USD/JPY.

The short-term range is 104.923 to 109.362. Its retracement zone at 107.143 to 106.619 is also potential support.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the 50% level at 108.851.

Bullish Scenario

A sustained move over 108.851 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to extend into 109.362. Taking out this level could trigger a surge into the June 5, 2020 main top at 109.849. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 108.851 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the minor bottom at 108.340, followed by the main Fibonacci level at 108.230.

The Fib level is a potential trigger point for an acceleration to the downside with the main 50% level at 107.154 an eventual downside target.