USD/JPY Forex Technical Analysis – Weakens Under 109.076, Strengthens Over 109.569
The Dollar/Yen is inching higher early Tuesday but that doesn’t change the near-term outlook. Helping to put a lid on the Forex pair and possibly lead to further selling pressure later in the session is growing anxiety the spreading Delta variant of the coronavirus could disrupt, if not, derail, the global economic recovery from the pandemic.
At 05:06 GMT, the USD/JPY is trading 109.329, up 0.063 or +0.06%.
Helping to weigh on sentiment is a surprise plunged in the New Zealand Dollar and a weaker Australian Dollar. Additional pressure is coming from weaker U.S. Treasury yields and lower U.S. equity markets.
The New Zealand Dollar fell sharply after the virus-free country found a community outbreak of COVID-19 for the first time since February. The Australian Dollar lost ground after the minutes from the Australian central bank’s last policy meeting were perceived to be more dovish than some had anticipated.
U.S. Treasury yields are lower, with investor focus on minutes from the Federal Reserve’s latest meeting, due to be published on Wednesday. Besides the minutes, traders are hoping Tuesday’s retail sales report and Federal Reserve Chairman Jerome Powell offer clues as to when the central bank might start paring back its asset purchases.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 108.722 will change the main trend to down. A move through 110.800 will signal a resumption of the uptrend.
The intermediate range is 107.479 to 111.659. The USD/JPY is currently trading inside its retracement zone at 109.569 to 109.076. This zone is controlling the near-term direction of the Forex pair.
The minor range is 108.722 to 110.800. Its 50% level at 109.761 is potential resistance.
The short-term resistance zone is 110.191 to 110.537.
Daily Swing Chart Technical Forecast
The direction of the USD/JPY on Tuesday is likely to be determined by trader reaction to the Fib level at 109.076.
Bearish Scenario
A sustained move under 109.076 will indicate the presence of buyers. This could trigger a quick break into the main bottom at 108.722. A failure to hold this level could lead to an acceleration into the long-term Fib at 108.230.
Bullish Scenario
Holding above 109.076 will signal the presence of buyers. This could lead to a labored rally into 109.569 and 109.761.
Taking out 109.761 could trigger an acceleration into 110.191 to 110.537.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
