USD/JPY Forex Technical Analysis – Strong Selling Pressure Should Drive Dollar/Yen into 109.076

The Dollar/Yen is trading lower early Monday, continuing last week’s sell-off that began on Wednesday, following the release of weaker-than-expected U.S. consumer inflation data and continued on Friday as consumer sentiment dropped sharply to its lowest level since 2011.

At 01:46 GMT, the USD/JPY is trading 109.410, down 0.193 or -0.18%.

Last Friday’s consumer sentiment news raised fears the U.S. economy may be slowing. Combined with the deceleration in inflation pressures, traders now fear the Fed may delay an earlier tapering of Federal Reserve asset purchases. This is putting pressure on U.S. Treasury yields, making the U.S. Dollar a less-attractive investment.

Daily Swing Chart Technical Analysis

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

A trade through 110.800 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 108.722 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.

The minor range is 108.722 to 110.800. The USD/JPY is currently trading on the weak side of its 50% level at 109.761.

The main range is 107.479 to 111.659. The USD/JPY is currently testing its retracement zone at 109.569 to 109.076. Trader reaction to this zone will determine the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY early Monday is likely to be determined by trader reaction to the minor 50% level at 109.761.

Bearish Scenario

A sustained move under 109.761 will indicate the presence of sellers. Crossing to the weak side of the main 50% level at 109.569 will indicate the selling pressure is getting stronger. If this move continues to generate enough downside momentum then look for the selling to possibly extend into the main Fibonacci level at 109.076.

Bullish Scenario

A sustained move over 109.761 will signal the presence of buyers. This is a potential trigger point for an acceleration to the upside with the short-term retracement zone at 110.191 to 110.537 the next likely upside target area.