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James Hyerczyk
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USD/JPY

The Dollar/Yen is trading lower early Monday after failing to confirm the previous session’s closing price reversal bottom. The move has put the Forex pair within striking distance of a change in trend.

Lower Treasury yields and the lack of fresh economic news is behind today’s early weakness. The price action also suggests that investors believe the Fed’s assessment of the economy in that any surge in inflation is likely to be “transitory” and therefore, rates are going to remain at historically low levels.

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At 05:01 GMT, the USD/JPY is trading 108.662, down 0.131 or -0.12%.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower. A trade through 108.407 will change the main trend to down.

A move through 110.966 will signal a resumption of the uptrend. This is highly unlikely, but since the Forex pair is down 13 sessions from this main top, traders should start watching for a closing price reversal bottom. We saw one on Friday, but the move wasn’t convincing enough to attract any buyers.

The minor trend is down. This is controlling the momentum. A trade through 109.961 will change the minor trend to up.

The main range is 111.715 to 102.593. The USD/JPY is hovering just above its retracement zone at 108.230 to 107.154. Since this is a potential support area, watch for buyers to show up on a test of this zone.

The short-term range is 108.407 to 110.966. Its retracement zone at 109.385 to 109.687 is a potential upside target and resistance area.

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Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Monday is likely to be determined by trader reaction to 108.966.

Bearish Scenario

A sustained move under 108.966 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to possibly extend into the main bottom at 108.407.

Taking out the main bottom will change the main trend to down, setting up a possible extension of the selling into the main Fibonacci level at 108.230. Look for buyers on the first test. If this level fails as support then look for the start of a break toward the main 50% level at 107.154.

Bullish Scenario

A sustained move over 108.966 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the short-term retracement zone at 109.385 to 109.687.

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