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James Hyerczyk
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USD/JPY

The Dollar/Yen lost ground on Friday as concerns about a surge in coronavirus infections in the United States and elsewhere supported the safe-haven Japanese Yen.

Investors were reacting to the news that more than 60,000 new COVID-19 cases were reported across the United States on Thursday, the largest single-day tally by any country in the global pandemic so far, discouraging some American consumers from returning to public spaces.

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On Friday, the USD/JPY settled at 106.92, down 0.29 or -0.27%.

The dollar also weakened after U.S. producer prices unexpectedly fell 0.2% in June, following a 0.4% rebound in May, as the economy battles depressed demand amid the COVID-19 pandemic.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 107.790 will change the main trend to up. The next downside target is the June 23 main bottom at 106.074.

The USD/JPY is down seven sessions from its July 1 main top at 108.163, which puts it inside the window of time for a closing price reversal bottom.

The short-term range is 106.074 to 108.163. The USD/JPY settled inside its retracement zone at 107.119 to 106.872 on Friday, which suggests it can move in either direction on Monday.

The USD/JPY also closed inside the longer-term retracement zone at 106.706 to 108.008 after briefly piercing the bottom of this range on Friday.

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Short-Term Outlook

The Dollar/Yen finally broke out of its narrow trading range last week despite the recent two-sided shifts in investor sentiment.

According to Monex, the one-month implied and historical volatility closed at a record low, indicating that the options markets are signaling investor concerns about a future outbreak in volatility.

Our daily chart indicates that 106.706 is a potential trigger point for an acceleration to the downside with 106.074 to 105.987 the next likely downside targets.

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