USD/JPY Forex Technical Analysis – Weekly Chart Indicates Strength Over 110.761, Weakness Under 109.695

The Dollar/Yen finished higher last week as investors shrugged off concerns over a potential U.S. recession later in the year. The previous week, the Forex pair was driven to a five-week low after the 10-year U.S. Treasury note and the 3-month Treasury bill inverted. This raised red flags about a recession since research showed it was a highly accurate indicator of an economic turndown.

Last week, the USD/JPY settled at 110.844, up 0.925 or +0.84%.

The USD/JPY was supported throughout the week by increased appetite for riskier assets on the hope that renewed U.S.-China trade relations would lead to a trade deal.

Weekly Swing Chart Technical Analysis

The main trend is down according to the weekly swing chart. The main trend changes to up on a trade through 114.210. A move through 105.180 will signal a resumption of the downtrend. A trade though 109.710 will make 112.137 a new main top.

The minor trend is up. A trade through 108.495 will change the minor trend to down.

There are some conflicts with momentum on the chart which could be the reasons for the tight trading range. The minor uptrend tends to indicate upside momentum, while the weekly closing price reversal top at 112.137 and subsequent confirmation tends to indicate downside momentum.

The main range is 114.210 to 105.180. Its retracement zone at 109.695 to 110.761 is controlling the longer-term direction of the Forex pair. The USD/JPY straddled this zone the last two weeks.

The short-term range is 105.180 to 112.137. Its retracement zone at 108.659 to 107.838 is the next downside target.

Weekly Swing Chart Technical Forecast

Based on last week’s price action and close at 110.844, the direction of the USD/JPY this week is likely to be determined by trader reaction to the main Fibonacci level at 110.761.

Bullish Scenario

A sustained move over 110.761 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into the closing price reversal top at 112.137. This price is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 110.761 will signal the presence of sellers. The first downside target is the main 50% level at 109.695. Taking out the low at 109.710 from the week-ending March 22 could trigger an acceleration to the downside with the next target zone 108.659 to 107.838.