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USD/JPY Forex Technical Analysis – Volatility Expected with Bullish Tone Over 115.820, Bearish Under 115.509

By:
James Hyerczyk
Published: Jan 7, 2022, 10:51 UTC

The direction of the USD/JPY on Friday is likely to be determined by trader reaction to 115.820.

USD/JPY

In this article:

The Dollar/Yen is trading flat on Friday ahead of today’s U.S. Non-Farm Payrolls report, due to be released at 13:30 GMT.  Earlier in the week, the greenback hit a five-year peak against the Japanese Yen on Tuesday, the day before the Federal Reserve meeting minutes indicated policymakers were preparing to tighten monetary policy more aggressively.

At 10:10 GMT, the USD/JPY is trading 115.831, down 0.026 or -0.02%. On Thursday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $80.95, up $0.12 or +0.15%.

The December Non-Farm Payrolls report is due to be released at 13:30 GMT on Friday. Economists are expecting the economy to have added 422,000 jobs in December, according to estimates compiled by Dow Jones. The unemployment rate is expected to come in at 4.1%.

A stronger than expected Non-Farm Payrolls number should be bullish for the USD/JPY because it will solidify the chances of a March interest rate hike by the Federal Reserve. However, some traders are saying Dollar/Yen traders have already priced in this news. This could lead to a limited reaction or even encourage profit-taking.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 116.345 will signal a resumption of the uptrend. Taking out 113.148 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, we could see the formation of a potentially bearish closing price reversal top.

The minor trend is also up. A trade through 114.672 will change the minor trend to down. This will shift momentum to the downside.

The first minor range is 114.672 to 116.345. Its 50% level at 115.509 is support.

The second minor range is 113.148 to 116.345. Its 50% level at 114.747 is another potential downside target.

The short-term range is 112.538 to 116.345. If the minor trend changes to down then look for the selling to possibly extend into its retracement zone at 114.442 to 113.992.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Friday is likely to be determined by trader reaction to 115.820.

Bullish Scenario

A sustained move over 115.820 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into 116.345. Taking out this level could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under 115.820 will signal the presence of sellers. The first downside target is 115.509. We could see a technical bounce on the first test of this level, but if it fails then look for the start of a sharp break into 114.747.

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

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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