USD/JPY Forex Technical Analysis – Trader Reaction to 108.008 Could Set Weekly Tone

The Dollar/Yen is trading firm on Monday as global growth fears drove up demand for the safe-haven greenback. Plunging oil prices and commodity currencies are creating the most fear for investors.

Risk sentiment early in the session is not quite as positive as it was last week, leading to a slight level of demand for the U.S. Dollar, however, gains have been limited on news that the New Zealand government will begin to relax strict virus containment measures from next week.

At 06:20 GMT, the USD/JPY is trading 107.901, up 0.347 or +0.32%.

In other news, Japan’s exports slumped the most in nearly four years in March as U.S.-bound shipments, including cars, fell at the fastest rate since 2011, highlighting the damage the coronavirus pandemic has inflicted on global trade.

Adding to worries the world’s third-largest economy is sliding into recession, Ministry of Finance data showed Japanese exports fell 11.7% in the year to March, compared with a 10.1% decrease expected by economists in a Reuters poll.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but the price action since April 1 suggests more of a neutral to sideways trade.

A trade through 109.381 will change the main trend to up. A move through the two main bottoms at 106.930 and 106.921 will signal a resumption of the downtrend.

The main range is 112.226 to 101.185. The USD/JPY is currently trading inside its retracement zone at 106.706 to 108.008. This zone is controlling the near-term direction of the Forex pair.

The intermediate range is 101.185 to 111.715. Its retracement zone at 106.450 to 105.207 is potential support.

The two retracement zone combine to form a major support cluster at 106.706 to 106.450.

The short-term range is 111.715 to 106.921. Its retracement zone at 109.318 is potential resistance. This zone stopped the selling at 109.381 on April 6.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 107.901, the direction of the USD/JPY is likely to be determined by trader reaction to the main Fibonacci level at 108.008.

Bullish Scenario

A sustained move over 108.008 will indicate the presence of buyers. If this move creates enough upside momentum then look for a possible near-term rally into 109.318 to 109.884.

Bearish Scenario

A sustained move under 108.008 will signal the presence of sellers. This will be an indication that bearish traders are defending the downtrend. This could trigger a break into a huge cluster of levels ranging from 106.930 to 106.450.

The 50% level at 106.450 is a potential trigger point for an acceleration to the downside.