USD/JPY Forex Technical Analysis – Testing Weakside of Retracement Zone at 105.113 to 105.570

The Dollar/Yen edged lower on Friday as investors moved the proceeds from selling riskier assets back to the safe-haven Japanese Yen on worries about the economic damage from the escalation of COVID-19 cases in the United States and Europe.

The Yen hit its highest level since Monday when it tumbled after Pfizer announced that it had developed a working virus vaccine.

At 09:25 GMT, the USD/JPY is trading 105.128, up 0.004 or 0.00%.

The Yen remains down by about 1.5% against the greenback this week, its sharpest weekly drop in five months, and softer on most crosses. But the bounce from its lows – along with softness in riskier currencies – shows plenty of caution remains.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 105.677 will signal a resumption of the uptrend, while a trade through the main top at 106.109 will reaffirm the uptrend.

The main trend will change to down on a move through 103.177. This is not likely but there is room for a normal 50% to 61.8% retracement of its current rally.

The main range is 107.049 to 103.177. The USD/JPY is currently trading on the weak side of its retracement zone at 105.113 to 105.570, putting it in a potentially bearish position. This could turn it into resistance.

The minor range is 103.177 to 105.677. Its retracement zone at 104.427 to 104.132 is the primary downside target and potential support.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the USD/JPY on Friday is likely to be determined by trader reaction to 105.113.

Bearish Scenario

A sustained move under 105.113 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into 104.427 to 104.132.

Bullish Scenario

A sustained move over 105.113 will signal the presence of buyers. If this move generates enough upside momentum then look for the buying to possibly extend into the main Fibonacci level at 105.570.

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