USD/JPY Forex Technical Analysis – Next Major Challenge for Bullish Investors is 105.347 Fibonacci Level

The Dollar/Yen is trading higher on Thursday, testing its highest level since November 12, boosted by rising U.S. Treasury yields and strong demand for riskier assets. The catalysts behind these moves are optimism about the U.S. economic outlook as investors bet on a speedier recovery, progress toward the passing of President Biden’s stimulus plan and encouraging coronavirus numbers on an improving vaccination rollout.

At 09:01 GMT, the USD/JPY is trading 105.248, up 0.218 or +0.21%.

Despite the prolonged rally, the Dollar/Yen faces a major test on Friday with the release of non-farm payrolls data, which will help confirm whether the world’s largest economy has been able to shrug off a dip in growth toward the end of last year.

Data due on Friday is forecast to show the U.S. economy added 50,000 jobs in January, which would be a mild recovery from shedding 140,000 jobs in the previous month as a spike in coronavirus infections curbed economic activity.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out Tuesday’s high at 105.174.

A trade through 103.328 will change the main trend to down. This is highly unlikely but there is the possibility of a closing price reversal top, which could signal a temporary top.

The main range is 107.049 to 102.593. The USD/JPY is currently hovering near the upper level of its retracement zone at 104.821 to 105.347.

The short-term range is 105.677 to 102.593. Its retracement zone at 104.499 to 104.135 is support.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to yesterday’s close at 105.030.

Bullish Scenario

A sustained move over 105.030 will indicate the presence of buyers. If this move generates enough upside momentum then look for the buying to possibly extend into the main Fibonacci level at 105.347. We could see a technical bounce on the first test of this level.

Overtaking 105.374 could trigger an acceleration into the November 11 main top at 105.677.

Bearish Scenario

A sustained move under 105.030 will signal the presence of sellers. This could trigger a break into the main 50% level at 104.821.

A close under 105.03 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

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