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USD/JPY Forex Technical Analysis – Weakens Under 108.589, Strengthens Over 108.720

By:
James Hyerczyk
Published: May 11, 2021, 11:51 UTC

The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the pivots at 108.589 and 108.720.

USD/JPY

In this article:

The Dollar/Yen is edging lower on Tuesday on light-trading as investors start to position themselves ahead of Wednesday’s U.S. consumer inflation report. On Monday, the Forex pair bounced back following a steep decline on Friday in response to a big miss in the April U.S. Non-Farm Payrolls report. Treasury yields plunged on the jobs report news, but have since regained all of its losses on Friday.

At 11:05 GMT, the USD/JPY is trading 108.724, down 0.126 or -0.12%.

Also providing some support for the USD/JPY were comments from Chicago Federal Reserve President Charles Evans who said on Monday that April’s unexpectedly small increase of 266,000 payroll jobs is likely a “one month thing” associated with the complexities of reopening the economy after the coronavirus pandemic.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 107.479 will signal a resumption of the downtrend. A move through 110.966 will change the main trend to up. Taking out 108.337 will make 109.698 a new lower main top and change in trend point.

On the downside, the main support is the retracement zone at 108.230 to 107.154. This zone stopped the selling at 107.479 on April 23.

The USD/JPY is currently straddling a pair of 50% levels at 108.589 and 108.720.

The short-term range is 110.966 to 107.479. Its retracement zone at 109.223 to 109.634 is potential resistance.

Daily USD/JPY

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the pivots at 108.589 and 108.720.

Bearish Scenario

A sustained move under 108.589 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 108.337, followed closely by 108.230. This is a potential trigger point for an acceleration to the downside.

Bullish Scenario

A sustained move over 108.720 will signal the presence of buyers. This could trigger the start of a labored rally with potential upside targets a series of retracement levels at 109.018, 109.223 and 109.634.

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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