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James Hyerczyk
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USD/JPY

The Dollar/Yen is edging lower on Monday with traders reacting to lower Treasury yields. Safe-haven buying is also supporting the Forex pair amid renewed worries about coronavirus restrictions in Asia. Nonetheless, investors are heavily positioned for it to fall while the U.S. Federal Reserve keeps rates low.

At 09:03 GMT, the USD/JPY is trading 109.211, down 0.156 or -0.14%.

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In other news, Japan’s wholesale prices rose in April at their fastest annual pace in six and half years, data showed on Monday, a sign that rising energy and commodities costs were pinching corporate margins.

The corporate goods price index (CGPI), which measures the price companies charge one another for goods and services, rose 3.6% in April from a year earlier, Bank of Japan data showed, faster than a median market forecast for a 3.1% gain.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum is trending higher. A trade through 109.785 will change the minor trend to up. A move through 107.479 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A move through 109.785 will indicate the buying is getting stronger. A move through 108.337 will reaffirm the minor trend.

The short-term range is 110.966 to 107.479. The USD/JPY is currently testing the lower end of its retracement zone at 109.223 to 109.634.

The minor range is 107.479 to 109.785. Its 50% level at 108.632 is the next downside target level.

The main support is the Fibonacci level at 108.230.

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Daily Swing Chart Technical Forecast

The direction of the USD/JPY is likely to be determined by trader reaction to the short-term 50% level at 109.223.

Bearish Scenario

A sustained move under 109.223 will indicate the presence of sellers. If this move is able to create enough downside momentum then look for the selling to possible extend into the minor 50% level at 108.632 over the short-run.

Bullish Scenario

A sustained move over 109.223 will signal the presence of buyers. This could lead to a labored rally with the next potential upside targets the short-term Fibonacci level at 109.634, and the main top at 109.785. This is a potential trigger point for an acceleration to the upside.

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