USD/JPY Forex Technical Analysis – Trader Reaction to 114.364 Pivot Sets Friday’s Early Tone

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The Dollar/Yen is inching higher early Friday after rebounding the previous session from a steep two-day setback. Nonetheless, the Forex pair is still in a position to finish higher for the week as strong U.S. economic data supported the idea of an earlier than expected rate hike by the Fed. Besides economic data, traders are also monitoring comments from Federal Reserve officials.

At 04:36 GMT, the USD/JPY is trading 114.360, up 0.115 or +0.10%.

Two-sided movement in U.S. Treasury yields is also contributing to the volatility in the Dollar/Yen. On Thursday, U.S. Treasury yields remained little changed after weekly jobless claims data came in line with expectations. But early Friday, yields are inching higher, helping to underpin the USD/JPY.

The Dollar/Yen has been supported all week as strong economic data stoked concerns about the pace at which the Federal Reserve will normalize monetary policy, particularly amid rising inflation.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 114.969 will signal a resumption of the uptrend. A move through 113.758 will change the main trend to down.

The minor range is 113.758 to 114.969. The USD/JPY is currently testing its pivot at 114.364.

The short-term range is 112.728 to 114.969. Its retracement zone at 113.849 – 113.584 is support.

The main range is 110.826 to 114.969. Its 50% level at 112.898 is the key support controlling the near-term direction of the Forex pair.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Friday is likely to be determined by trader reaction to 114.364.

Bullish Scenario

A sustained move over 114.364 will indicate the presence of buyers. This could trigger a quick move into 114.425.

Overtaking 114.425 will indicate the buying is getting stronger with 114.969 the next likely upside target.

Bearish Scenario

A sustained move under 114.364 will signal the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the retracement zone at 113.849 – 113.584.

Inside this zone is a main bottom at 113.758. Taking it out will change the main trend to down. The short-term Fibonacci level at 113.584 is a trigger point for an acceleration to the downside with 112.898 the next target.