USD/JPY Forex Technical Analysis – Trader Reaction to Minor Pivot at 108.851 Sets the Tone

The Dollar/Yen is trading lower on Tuesday as U.S. Treasury yields weaken for a second session, dampening the U.S. Dollar’s appeal as a higher-yielding asset. Traders are also positioning themselves ahead of Tuesday’s first joint appearance before the U.S. House Committee on Financial Services by Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen. In prepared remarks published ahead of the hearing, Powell noted that the recovery is gaining steam, before adding there’s still a long way to go.

At 06:52 GMT, the USD/JPY is trading 108.716, down 0.109 or -0.10%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.362 will signal a resumption of the uptrend. The main trend will change to down on a trade through the nearest main bottom at 104.923.

The minor trend is also up. A trade through 108.340 will change the minor trend to down. This will shift momentum to the downside.

The minor range is 108.340 to 109.362. It is currently trading on the weak side of its pivot at 108.851.

The main range is 111.715 to 102.593. Its retracement zone at 108.230 to 107.154 is potential support. It is also controlling the near-term direction of the USD/JPY.

Daily Swing Chart Technical Forecast

The early price action suggests the direction of the USD/JPY on Tuesday will be determined by trader reaction to 108.851.

Bearish Scenario

A sustained move under 108.851 will indicate the presence of sellers. This could lead to a break into the minor bottom at 108.340, followed by the Fibonacci level at 108.230.

Buyers could come in on the first test of 108.230, but if it fails be prepared for the start of a steep break into 107.154 over the near-term.

Bullish Scenario

A sustained move over 108.851 will signal the presence of buyers. This could lead to a quick test of 108.976, followed by the main top at 109.362. Taking out this level could trigger a breakout into 109.849.

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