USD/JPY Forex Technical Analysis – Trader Reaction to Pivot at 115.509 Sets the Tone

The Dollar/Yen is trading higher on Monday as traders bet U.S. inflation data and appearances from several Federal Reserve officials would bolster the case for higher interest rates. Additionally, the trade in the Asia session is being thinned by a holiday in Japan.

The dollar had met with some selling late last week after a weaker-than-expected headline U.S. jobs-creation figure squeezed traders out of long dollar positions. But analysts said better-than-expected unemployment numbers still made a good case for hikes sooner rather than later.

At 08:17 GMT, the USD/JPY is trading 115.785, up 0.223 or +0.19%. On Friday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $81.22, up 0.25 or +0.31%.

Federal Reserve chair Jerome Powell and governor Lael Brainard testify before Senate committees this week regarding their nominations as chair and deputy chair of the Fed.

U.S. inflation figures are due on Wednesday, with headline CPI seen climbing to a red-hot 7% year-on-year.


Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 116.345 will signal a resumption of the uptrend. A move through 112.538 will change the main trend to down.

The minor trend is also up. A trade through 114.672 will change the minor trend to down. This will also shift the momentum.

The minor range is 114.672 to 116.345. Its 50% level or pivot at 115.509 is support.

The second minor range is 113.148 to 116.345. Its 50% level at 114.747 is the next support level.

The short-term range is 112.538 to 116.345. If the minor trend changes to down then its retracement zone at 114.442 to 113.992 will become the primary downside target and value zone. This area should be attractive to longer-term buyers.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Monday is likely to be determined by trader reaction to 115.509.

Bullish Scenario

A sustained move over 115.509 will indicate the presence of buyers. The first upside target is 115.942. Overtaking this level, will indicate the buying is getting stronger with 116.345 the next target. Overtaking this level could trigger an acceleration to the upside since there isn’t any major resistance until over 118.000.

Bearish Scenario

A sustained move under 115.509 will signal the presence of sellers. The daily chart indicates there is plenty of room to the downside with 114.747 – 114.672 the next key downside area.