USD/JPY Forex Technical Analysis – Retracement Zone at 110.191 – 110.537 Providing Resistance

The Dollar/Yen is trading lower early Thursday after posting a potentially bearish closing price reversal top the previous session. The Forex pair traded higher early in the session on Wednesday on the back of a rise in U.S. Treasury yields. However, it couldn’t hold on to those early gains as doubts about the strength of the economic recovery cause yields to fall into the close.

At 02:46 GMT, the USD/JPY is trading 110.147, down 0.124 or -0.11%.

Contributing to the weakness in the Dollar/Yen were comments from New York Bank President John Williams. He said late Wednesday that more progress is needed in the labor market before reducing its stimulus.

His remarks come a few days after surprisingly soft U.S. payrolls figures published last Friday have effectively ruled out any chance of the Fed’s tapering this month.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside following the confirmation of Wednesday’s closing price reversal top.

A trade through 110.448 will negate the closing price reversal top and 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 110.191 to 110.537 is resistance. This area stopped the rally at 110.448 on Wednesday.

The minor range is 110.800 to 109.114. Its 50% level or pivot at 109.957 is the next downside target.

The main range is 107.479 to 111.659. Its retracement zone at 109.569 to 109.076 is the primary downside target area.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to 110.191.

Bearish Scenario

A sustained move under 110.191 will indicate the presence of sellers. The first downside target is the pivot at 109.957. Buyers could come in on the first test of this level, but if it fails then look for an acceleration into 109.590 to 109.569.

Bullish Scenario

A sustained move over 110.191 will signal the presence of buyers. If this creates enough upside momentum then look for a surge into 110.448.

Taking out 110.448 will indicate the buying is getting stronger. The next potential trigger point for an acceleration to the upside is the Fibonacci level at 110.537.