USD/JPY Forex Technical Analysis – Sustained Move Under 110.362 Could Trigger Break into 109.726

The Dollar/Yen is trading lower late in the session on Thursday on profit-taking following a volatile two-day rally. The inability to follow-through to the upside encouraged investors to lighten up on the long side early in the session. Contributing to the selling pressure were a lackluster stock market and lower Treasury yields.

At 19:36 GMT, the USD/JPY is trading 110.095, down 0.192 or -0.17%.

U.S. Treasury yields moved lower on Thursday after weekly jobless claims data came in higher than expected. The yield on the benchmark 10-year Treasury note fell 2 basis points to 1.262%. The yield on the 30-year Treasury bond dropped a similar amount to 1.91%.

In economic news, the U.S. Department of Labor said Thursday morning that there were 419,000 initial jobless claims last week, up from a revised 368,000 claims in the prior period. Economists polled by Dow Jones are expecting the number of first-time filings to be 350,000 for the week-ended July 17.

Additionally, the National Association of Realtors said Thursday that existing home sales rose slightly in June, breaking a four-month slide. The supply of homes on the market also ticked up.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 109.065 will signal a resumption of the downtrend. A move through 111.659 will change the main trend to up.

The minor trend is up. This is controlling the momentum. Taking out 110.387 will indicate the buying is getting stronger. A move through the next minor swing top at 110.698 could trigger an acceleration to the upside.

The short-term range is 111.659 to 109.065. Its retracement zone at 110.362 to 110.668 is resistance. Its 50% level at 110.362 stopped the buying on Wednesday and Thursday.

The minor range is 109.065 to 110.387. Its 50% level at 109.726 is the first downside target.

The major support is the long-term retracement zone at 109.569 to 109.076.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY into the close on Thursday is likely to be determined by trader reaction to the short-term 50% level at 110.362.

Bearish Scenario

A sustained move under 110.362 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the short-term 50% level at 109.726, followed by long-term 50% level at 109.569.

Bullish Scenario

A sustained move over 110.362 will signal the presence of buyers. This could trigger an acceleration to the upside with the next target a resistance cluster at 110.668 – 110.698.