USD/JPY Forex Technical Analysis – Rangebound with 110.191 Resistance, 109.569 Support

The Dollar/Yen is edging higher early Monday as risk appetite improved with the major U.S. stock indexes gaining and benchmark Treasury yields moving higher.

The move by the stock indexes is bringing the carry trade into play. This is a strategy where U.S. investors borrow in Yen from banks in Japan then sell the Yen to buy the dollars they need to invest in U.S. stocks.

Meanwhile, higher U.S. Treasury yields are helping to widen the spread between U.S. Government bonds and Japanese Government bonds, making the U.S. Dollar a more attractive investment.

At 03:50 GMT, the USD/JPY is trading 109.858, up 0.066 or +0.06%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, the upside momentum has been struggling for two weeks.

A trade through 110.800 will signal a resumption of the uptrend. A move through 109.114 will change the main trend to down.

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

On the upside, the first resistance is a minor pivot at 109.957, followed by a short-term retracement zone at 110.191 to 110.537.

Daily Swing Chart Technical Forecast

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

Bullish Scenario

A sustained move over 109.957 will indicate the presence of buyers. This could lead to a labored rally with potential targets lined up at 110.191, 110.222 and 110.537.

Bearish Scenario

A sustained move under 109.957 will signal the presence of sellers. This could trigger a retest of support at 109.569. This is also a potential trigger point for an acceleration to the downside with the next likely target 109.114 to 109.076.