USD/JPY Forex Technical Analysis – Testing Potential Resistance Zone at 104.135 to 104.499

The Dollar/Yen is trading higher late in the session on Thursday, but trading off its high after U.S. stocks and other riskier currencies rebounded, dampening demand for the safe-haven greenback.

The dollar was boosted by safety buying earlier this week on concerns that U.S. fiscal stimulus will not be large as originally hoped, and due to the continuing spread of COVID-19 as countries struggle to roll out vaccines.

At 20:38 GMT, the USD/JPY is trading 104.241, up 0.141 or +0.14%.

The USD/JPY gave up earlier gains on Thursday as stocks rose, boosted by a reversal of declines in mega-cap technology stocks.

That came even after data on Thursday showed that the U.S. economy contracted at its sharpest pace since World War Two in 2020 as COVID-19 ravaged services businesses like restaurants and airlines, throwing millions of Americans out of work and into poverty.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed early Thursday when buyers traded through the previous main top at 104.398. A trade through 103.328 will change the main trend to down on a move through 103.328.

The minor trend is also up. A trade through 103.556 will change the minor trend to down.

The intermediate range is 105.677 to 102.593. The USD/JPY is currently testing its retracement zone at 104.135 to 104.499. Thursday’s high fell short of the upper or Fibonacci level at 104.499.

The minor range is 103.328 to 104.462. Its 50% level at 103.895 is a potential downside target. Since the main trend is up, buyers could come in on a test of this level.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY into the close is likely to be determined by trader reaction to 104.135.

Bullish Scenario

A sustained move over 104.135 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a possible rally into 104.462 to 104.449 over the short-run.

Bearish Scenario

A sustained move under 104.135 will signal the presence of sellers. If this move creates enough downside momentum then look for a possible break into the pivot at 103.895.