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James Hyerczyk

The Dollar/Yen is trading nearly flat early Wednesday shortly after the release of the Bank of Japan’s interest rate decision and monetary policy statement. Additionally, increased demand for higher risk assets is making the Japanese Yen a less-attractive asset. Rising U.S. Government bond yields also drove investors into the U.S. Dollar.

At 0633 GMT, the USD/JPY is trading 112.368, up 0.012 or +0.01%.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Tuesday when buyers took out a main top at 112.152. This added to the strong upside momentum. The next upside target is the July 19 main top at 113.210.

The minor trend is also up. A trade through 111.665 will change the minor trend to down.

The main range is 113.210 to 109.770. Its retracement zone at 111.896 to 111.490 is new support. Holding above this zone is also helping to generate the strong upside bias.


Daily Swing Chart Technical Forecast

Based on the early trade, the direction of the USD/JPY today is likely to be determined by trader reaction to the uptrending Gann angle at 112.379. The Forex pair is essentially sitting on this angle at this time.

Crossing to the strong side of the angle at 112.379 and sustaining the rally could drive the USD/JPY into a resistance angle at 112.523.

Look for a technical bounce on the first test of 112.523. However, taking it out with conviction could trigger an acceleration to the upside with the next target angle coming in at 112.866. This is the last potential resistance angle before the 113.210 main top.

The inability to overcome and sustain a move over 112.523 may not necessarily indicate the presence of sellers, but it may be a sign of weak buying. If traders can sustain a move under 112.523 then we could start to see some selling late in the day. This move is likely to take place if the fundamentals begin to shift.

The nearest support is the main Fibonacci level at 111.896.

Basically, we’re looking at a strong upside bias to develop on a sustained move over 112.523, and for a strong downside bias to develop on a sustained move under 112.379.

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