USD/JPY Forex Technical Analysis – Weakens Under 105.113, Strengthens Over 105.570

The Dollar/Yen is trading lower on Thursday after hitting its highest level since October 20 the previous session. The move is likely being fueled by profit-taking after a nearly weeklong rally. The catalyst behind the weakness is a sharp drop in U.S. Treasury yields.

Although the Treasury Department was closed on Wednesday, the futures market were open and the December 10-year U.S. Treasury note posted a closing price reversal bottom, indicating that yields had reversed lower. On Thursday, buyers are following through to the upside and rates are falling further, making the U.S. Dollar a less-attractive investment.

At 06:10 GMT, the USD/JPY is trading 105.234, down 0.198 or -0.19%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 105.677 will signal a resumption of the uptrend. The main trend changes to down on a move through the last main bottom at 103.177.

The main range is 107.049 to 103.177. The USD/JPY is currently trading inside its retracement zone at 105.113 to 105.570. Trader reaction to this zone should determine the near-term direction of the Forex pair.

The minor range is 103.177 to 105.677. Its retracement zone at 104.427 to 104.132 is the primary downside target. Since the main trend is up, buyers could show up on the first test of this zone.

Daily Swing Chart Technical Forecast

The price action the last two sessions indicates that the direction of the USD/JPY on Thursday is likely to be determined by trader reaction to the 50% level at 105.113.

Bearish Scenario

A sustained move under 105.113 will indicate the presence of sellers. This is a potential trigger point for an acceleration to the downside with 104.427 to 104.132 the next likely downside target.

Bullish Scenario

A sustained move over 105.113 will signal the presence of buyers. This could trigger a surge into 105.570, followed closely by 105.677. This is a potential trigger point for an acceleration to the upside.

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