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James Hyerczyk
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USD/JPY

The Dollar/Yen rose on Friday after the benchmark 10-year U.S. Treasury note rose following a government report that showed producer prices improved more-than-expected in March.

The jump in U.S. producer prices resulted in the largest annual gain in 9-1/2 years and likely marked the start of higher inflation as the economy reopens amid an improved public health environment and massive government aid.

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On Friday, the USD/JPY settled at 109.659, up 0.396 or +0.36%.

The producer price index (PPI) for final demand jumped 1.0% last month as costs increased across the board. The PPI rose 0.5% in February. In the 12 months through March, the PPI surged 4.2%. That was the biggest year-on-year rise since September 2011 and followed a 2.8% advance in February.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The main trend will change to down on a trade through 108.407. A move through 110.966 will signal a resumption of the uptrend.

The minor trend is also up. A trade through 108.999 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 110.966 to 108.999. Its 50% level at 109.983 is resistance.

The short-term range is 108.407 to 110.966. Its retracement zone at 109.687 to 109.385 is potential support.

The major support is the 50% to 61.8% retracement zone at 108.230 to 107.154.

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Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Monday is likely to be determined by trader reaction to 109.687.

Bearish Scenario

A sustained move under 109.687 will indicate the presence of sellers. The first downside target is 109.385. If this level fails then look for the selling to possibly extend into the minor bottom at 108.999. This is a potential trigger point for an acceleration into the main bottom at 108.407.

Taking out 108.407 will change the main trend to down with 108.340 to 108.230 the next likely downside targets.

Bullish Scenario

A sustained move over 109.687 will signal the presence of buyers. The first upside target is 109.983. This is a potential trigger point for an acceleration to the upside with the next target coming in at 110.966.

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

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