USD/JPY Forex Technical Analysis – Sustained Move Under 111.040 Could Trigger Break into 110.426 – 110.133

The Dollar/Yen is edging lower for a third session on Tuesday as investors await the release of the minutes from the Federal Reserve’s meeting in June when it surprised the financial markets with a hawkish shift. The minutes are due to be published on Wednesday.

The catalysts behind the latest weakness in the Forex pair is last Friday’s U.S. June jobs report that showed a beat by the headline number, but a slight increase in the unemployment rate. The mixed results suggests the Federal Reserve can wait before tapering asset buying or hiking rates. Government yields fell on the news, making the U.S. Dollar less-attractive than the rates-sensitive Japanese Yen.

At 07:08 GMT, the USD/JPY is trading 110.904, down 0.075 or -0.07%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the closing price reversal on Friday.

A trade through 110.420 will change the main trend to down. A move through 111.659 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor range is 110.420 to 111.659. The USD/JPY is currently trading on the weak side of its 50% level at 111.040, making it potential resistance.

The short-term range is 109.192 to 111.659. Its retracement zone at 110.426 to 110.133 is the next downside target.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to 111.040.

Bullish Scenario

A sustained move over 111.040 will indicate the presence of buyers. The first upside target is 111.212, followed by the main top at 111.659.

Bearish Scenario

A sustained move under 111.040 will signal the presence of sellers. If this move continues to generate enough downside momentum then look for the selling to possibly extend into the support cluster at 110.426 – 110.420.

Look for a technical bounce on the first test of the support cluster, but if 110.420 fails then the trend will change to down and the USD/JPY could drop further into 110.133. This is a potential trigger point for an acceleration into another swing bottom at 109.717.