USD/JPY Forex Technical Analysis – Strengthens Over 109.957, Weakens Under 109.590; Low Volume to Hamper Trade

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The Dollar/Yen is edging higher early Monday on light volume as investors try to claw back some of its losses from Friday. Trading volumes are expected to remain low with U.S. markets closed for the Labor Day holiday.

At 05:29 GMT, the USD/JPY is trading 109.803, up 0.095 or +0.09%.

The early price action also suggests traders are still assessing the impact of Friday’s U.S. Non-Farm Payrolls report on future Federal Reserve policy.

The initial reaction to the headline number on Friday was bearish, but late in the session, traders took notice of the jump in Average Hourly Earnings and a drop in the unemployment rate. Both suggested the economy may not be as weak as initially suspected. This news helped drive Treasury yields higher which probably put a floor in the USD/JPY.

Nonetheless, the general consensus among traders is that the Fed will not announce plans to taper at its September 21-22 policy meeting.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.590 will change the main trend to down. A move through 110.420 will signal a resumption of the uptrend.

On the downside, the support comes in at 109.569 to 109.076. On the upside, the resistance zone is 110.185 to 110.531.

The short-term range is 110.800 to 109.114. The USD/USD is currently trading below its pivot at 109.957.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Monday is likely to be determined by trader reaction to 109.707.

Bullish Scenario

A sustained move over 109.707 will indicate the presence of buyers. This could lead to a labored rally with potential upside targets coming in at 109.957, 110.185, 110.420 and 110.531.

Bearish Scenario

A sustained move under 109.707 will signal the presence of sellers. The first downside target is a support cluster at 109.569 to 109.590.

Prices could start to accelerate to the downside if 109.590 is taken out with strong volume. The first target is the minor bottom at 109.414, followed by the main bottom at 109.114 and the Fibonacci level at 109.076.

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

This article was originally posted on FX Empire