USD/JPY Forex Technical Analysis – Weakens Under 105.389, Strengthens Over 105.526

The Dollar/Yen is trading steady-to-better early Tuesday after posting steep breaks the previous two sessions. Traders are using the Japanese Yen as a hedge against political uncertainty ahead of the U.S. presidential election on November 3 and confusion over whether a U.S. fiscal stimulus deal will be struck before or after the elections.

At 06:04 GMT, the USD/JPY is trading 105.389, up 0.054 or +0.05%.

Investors are monitoring the discussions over the possibility of a second coronavirus relief package, but not holding out much hope that one is in the works. Over the weekend, the Trump administration called on Congress to pass a smaller $1.8 billion coronavirus relief bill as negotiations on a bigger package continue to run into roadblocks. However, House Speaker Nancy Pelosi in a letter to colleagues, said the proposition has insufficient offers on healthcare issues.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 106.109 will change the main trend to up. A move through 104.002 will reaffirm the downtrend.

The minor trend is up. A trade through 104.944 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is 107.049 to 104.002. Its retracement zone at 105.526 to 105.885 is resistance.

The first minor range is 104.944 to 106.109. Its retracement zone at 105.527 to 105.389 is the first downside target.

The second minor range is 104.002 to 106.109. Its 50% level at 104.903 is the next potential support target.

The key level is the price cluster formed by 50% levels at 105.527 – 105.526.

Daily Swing Chart Technical Forecast

Looking at the early price action, the direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the minor Fibonacci level at 105.389.

Bearish Scenario

A sustained move under 105.389 will indicate the presence of sellers. This could trigger another acceleration to the downside since the nearest downside target is a potential support cluster at 104.944 to 104.903.

Bullish Scenario

A sustained move over 105.389 will signal the presence of buyers. The first upside target is the price cluster at 105.526 – 105.527.

Overtaking 105.527 could trigger an acceleration to the upside with the next potential target the main Fibonacci level at 105.885.

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