USD/JPY Forex Technical Analysis – Needs to Overcome 110.185 – 110.531 Resistance Zone to Extend Rally

The Dollar/Yen continues to hover just slightly above last week’s close as investors weigh the impact of Wednesday’s softer-than-expected private sector jobs report, ahead of today’s weekly unemployment claims report and Friday’s major U.S. August Non-Farm Payrolls report, which could impact the timing of the Federal Reserve’s plan to begin tapering its massive stimulus program.

At 08:54 GMT, the USD/JPY is trading 110.009, down 0.031 or -0.03%.

On Wednesday, the USD/JPY surged to its highest level since August 13, but then plunged to near its low for the session after a report on the U.S. labor market missed expectations by a wide margin.

The greenback fell against the Japanese Yen after the ADP National Employment Report showed private payrolls rose by 374,000 in August, up from 326,000 in July but well short of the 613,000 forecast.

A report on weekly initial jobless claims arrives on Thursday at 12:30 GMT and on Friday, the government releases the payrolls report for August, which could provide clues about the Federal Reserve’s policy path.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 110.420 will signal a resumption of the uptrend. A move through 109.590 will change the main trend to down.

The short-term range is 111.659 to 108.722. Its retracement zone at 110.185 to 110.531 is resistance. It stopped the rally at 110.420 on Wednesday day. The USD/JPY is currently trading on the weak side of this area.

The minor range is 110.800 to 109.114. The USD/JPY is currently straddling its pivot at 109.957.

On the downside, the support is a retracement zone at 109.569 to 109.076.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to the minor pivot at 109.957.

Bullish Scenario

A sustained move over 109.957 will indicate the presence of buyers. This could create a labored rally with potential resistance coming in at 110.185, 110.420 and 110.531.

The Fibonacci level at 110.531 is a potential trigger point for an acceleration to the upside if there is enough buying volume to take out the main top at 110.800.

Bearish Scenario

A sustained move under 109.957 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling pressure to possibly extend into a support cluster at 109.590 to 109.569.