USD/JPY Forex Technical Analysis – Trend Down with Sellers Targeting 109.569 – 109.076 Retracement Zone

The Dollar/Yen is trading flat early Wednesday after a steep sell-off the previous session. The catalyst behind the weakness was a report that showed a less-than-expected rise in U.S. inflation last month. The news only added to the uncertainty about the timing of the Federal Reserve’s tapering of its massive asset purchasing program.

At 0:06 GMT, the USD/JPY is trading 109.679, down 0.004 or -0.00%.

Data on Tuesday showing the U.S. consumer price index, excluding the volatile food and energy components, edged up just 0.1% last month has raised doubts about tapering this year.

August’s core CPI rise was also the smallest gain since February and followed a 0.3% rise in July. The so-called core CPI increased 4.0% on a year-on-year basis after gaining 4.3% in July.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Tuesday when sellers took out the previous main bottom at 109.590. A move through 110.448 will change the main trend to up.

The main range is 107.479 to 111.659. Its retracement zone at 109.569 to 109.076 is potential support.

The minor range is 110.800 to 109.114. Its 50% level or pivot at 109.957 is potential resistance.

The short-term range is 111.659 to 108.722. Its retracement zone at 110.191 to 110.537 is resistance. It topped a rally at 110.448 on September 8.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to the 50% level at 109.569.

Bearish Scenario

A sustained move under 109.569 will indicate the presence of sellers. The first downside target is the minor bottom at 109.414. Taking out this level could trigger an acceleration into the next main bottom at 109.114 and the main Fibonacci level at 109.076.

Bullish Scenario

A sustained move over 109.569 will signal the presence of buyers. If this move creates enough upside momentum then look for a counter-trend rally into the pivot at 109.957.