USD/JPY Struggling at 114.909 – 115.248 Retracement Zone

The Dollar/Yen is trading lower on Monday after giving back earlier gains. The Forex pair also failed to follow-through to the upside after touching a one-week high the previous session. The price action is being influenced by a dip in U.S. Treasury yields and weakness in U.S. stock index futures.

At 08:38 GMT, the USD/JPY is trading 115.129, down 0.064 or -0.06%. On Friday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $81.41, down $0.17 or -0.21%.

Treasury yields fell on Monday morning, cooling after a strong surge in the previous session, as investors digested economic data and looked ahead to the new trading week.

The yield on the benchmark 10-year Treasury note fell by 3 basis points to 1.9014% shortly after 06:30 GMT. The yield on the 30-year Treasury bond slipped 3 basis points to reach 2.1934%.

In other news, U.S. stock index futures are trading sideways-to-lower in early morning trading on Monday after the S&P posted its best week of 2022, boosted by quarterly earnings reports and a better-than-expected January employment report.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of the closing price reversal top on January 28.

A trade through 115.686 will negate the chart pattern and signal a resumption of the uptrend. A move through 114.162 will change the main trend to down.

The short-term range is 116.345 to 113.472. The USD/JPY is currently trading inside its retracement zone at 114.909 to 115.248.

The main range is 112.538 to 116.345. Its retracement zone at 114.442 to 113.992 is potential support. It stopped the selling on February 2 at 114.162.

The major support is the retracement zone at 113.586 to 112.934.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Monday is likely to be determined by trader reaction to 115.248.

Bullish Scenario

A sustained move over 115.248 will indicate the presence of buyers. Taking out Friday’s high at 115.427 will signal the return of buyers. This could trigger a surge into the main top at 115.686. This price is a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 115.248 will signal the presence of sellers. The first downside target is a 50% level at 114.909.

Buyers could come in on the first test of 114.909. However, if this level fails as support then look for an acceleration to the downside with the next target 114.442 to 113.992.