USD/JPY Forex Technical Analysis – Trend Changed to Up on Daily Swing Chart

The Dollar/Yen closed higher on Wednesday after the Fed decided at its two-day July meeting to cut its benchmark overnight lending rate by one quarter point to a target range of 2% to 2.25%. The central bank also said it would stop reducing the size of its balance sheet, which consists of bonds and mortgage-backed securities it purchased following the 2008 financial crisis. However, Fed Chair Powell actually sent the Forex pair higher after he cautioned that July’s policy decision did not necessarily reflect the start of broader easing.

On Wednesday, the USD/JPY settled at 108.766, up 0.163 or +0.15%.

Daily Swing Chart Technical Analysis

The main trend changed to up on Wednesday with the trade through 108.991. The main bottom is 107.212. The price action reflects the hawkish nature of the Fed announcements. If the breakout over 108.991 can gain traction then the next target is the May 30 main top at 109.930.

The minor trend is also up. A trade through 108.422 will change the minor trend to down. This will also shift momentum to the downside.

The main range is 110.677 to 106.775. Its retracement zone at 108.726 to 109.186 is currently being tested. This zone is controlling the near-term direction of the USD/JPY.

Daily Swing Chart Technical Forecast

Based on Wednesday’s price action and the close at 108.766, the direction of the USD/JPY on Thursday is likely to be determined by trader reaction to the 50% level at 108.726.

Bullish Scenario

A sustained move over 108.726 will indicate the presence of buyers. If this creates enough upside momentum then look for buyers to make a run at the Fibonacci level at 109.186. This is a potential trigger point for an acceleration to the upside with 109.930 the best near-term target.

Bearish Scenario

A sustained move under 108.726 will signal the presence of sellers. If this generates enough downside momentum then look for sellers to take a shot at the minor bottom at 108.422. A trade through this level will change the minor trend to down.