USD/JPY Forex Technical Analysis – Could Retrace to 106.077

USD/JPY Forex Technical Analysis – Could Retrace to 106.077 – 106.306 Before Resuming Downtrend

James Hyerczyk

Tue, Aug 18, 2020, 10:40 PM 3 min read

The Dollar/Yen is trading higher early Wednesday, reversing earlier losses, following a steep break the previous session. Today’s move is likely being fueled by short-covering and position-squaring ahead of the release of minutes from the Federal Reserve meeting at 18:00 GMT. Investors will be watching the minutes for clues as to the timing of the next major move by policymakers.

At 04:15 GMT, the USD/JPY is trading 105.554, up 0.154 or +0.15%.

On Tuesday, a drop in Treasury yields was the primary driver of the selling pressure. Dampened appeal for the dollar as a safe-haven investment also weighed on the greenback.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Tuesday when sellers took out the previous main bottom at 105.301. The move may have put the USD/JPY into oversold territory, leading to today’s reversal to the upside. The main trend will change to up on a move through the last main top at 107.049.

The short-term range is 104.189 to 107.049. Traders could try to form a support base at its retracement zone at 105.619 to 105.282.

The minor range is 107.049 to 105.104. Its retracement zone at 106.077 to 106.306 is a potential upside target. Since the main trend is down, sellers could show up on a test of this zone.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 105.554, the direction of the USD/JPY the rest of the session on Wednesday is likely to be determined by trader reaction to the 50% level at 105.619.

Bullish Scenario

A sustained move over 105.619 will indicate the presence of buyers. If this can create enough upside momentum then look for the rally to possibly extend into the retracement zone at 106.077 to 106.306. Watch for sellers on the first test of this area.

Bearish Scenario

A sustained move under 105.619 will signal the presence of sellers. The first objective is the Fibonacci level at 105.282. If this fails then look for the selling to extend into Tuesday’s low at 105.104. This is a potential trigger point for an acceleration to the downside with 104.189 the next major target.

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

This article was originally posted on FX Empire