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James Hyerczyk
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USD/JPY

Safe-haven buying spiked the Dollar/Yen into its highest level since November 16 on Friday amid another round of aggressive selling in the U.S. equity markets.

The Forex pair was edging higher shortly before the U.S. stock market opening as worries of a short squeeze grew after an army of retail investors returned to trade shares in GameStop Corp and Koss Corp. The stocks sky-rocketed after brokers including Robinhood eased some of the restrictions they had placed on trading.

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At 19:55 GMT, the USD/JPY is trading 104.719, up 0.465 or +0.45%.

Also weighing on investor sentiment and increasing demand for the safe-haven U.S. Dollar was bearish news about Johnson & Johnson’s COVID-19 vaccine. The drugmaker’s stock fell after data showed its single-dose vaccine was 72% effective in preventing COVID-19 in the United States, with a lower rate of 66% observed globally.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out a pair of main tops at 104.751 and 104.761. The main trend will change to down on a trade through 103.328.

The short-term range is 105.677 to 102.593. The USD/JPY is currently trading on the strong side of its retracement zone at 104.499 to 104.135. This zone is also new support.

The main range is 107.049 to 102.593. Its retracement zone at 104.821 to 105.347 stopped the intraday buying at 104.940. This zone is controlling the longer-term direction of the USD/JPY.

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Daily Swing Chart Technical Forecast

The direction of the USD/JPY into the close on Friday will be determined by trader reaction to 104.821.

Bullish Scenario

A sustained move over 104.821 will indicate the presence of buyers. If this move can generate enough upside momentum then look for a near-term rally into at least 105.347.

Bearish Scenario

A sustained move under 104.821 will signal the presence of sellers. This could trigger a short-term pullback into 104.499 to 104.135.

Friday’s spike to the upside may have been partly fueled by buy stops and aggressive short-covering. This would create the need for a pullback into support.

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