USD/JPY Forex Technical Analysis – Weakens Under 110.191, Strengthens Over 110.537

The Dollar/Yen is trading higher early Thursday as investors increased bets on the Fed tapering before the end of the year after the central bank policy meeting minutes showed policymakers were mostly in agreement with the move.

At 04:45 GMT, the USD/JPY is trading 110.169, up 0.404 or +0.37%.

In the minutes of their July 27-28 meeting release on Wednesday at 18:00 GMT, Fed officials saw the potential to ease bond-buying stimulus this year if the economy continues to improve as expected, although the condition of “substantial further progress” toward maximum employment had not yet been met.

A reduction in debt purchases is typically positive for the dollar as it means the Fed will not be flooding the financial system with cash, CNBC wrote.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 110.800 will signal a resumption of the uptrend. A move through 109.114 will change the main trend to down.

The short-term range is 111.659 to 108.722. The USD/JPY is currently testing its retracement zone at 110.191 to 110.537. This zone is controlling the near-term direction of the Forex pair.

The minor range is 110.800 to 109.114. The USD/JPY is currently trading on the strong side of its 50% level at 109.957, making it support.

The main range is 107.479 to 111.689. Its retracement zone at 109.569 to 109.076 is support. This zone stopped the selling at 109.114 on August 16.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to 110.191.

Bullish Scenario

A sustained move over 110.191 will indicate the presence of buyers. If this move creates enough upside momentum then look for a drive into 110.537. Sellers can come in on the first test of this level, but overtaking it will likely trigger a surge into the 110.800 main top. This is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 110.191 will signal the presence of sellers. This could trigger a pullback into the minor pivot at 109.957. Taking out this level with strong volume could trigger a break into 109.569.