USD/JPY Forex Technical Analysis – Trading on Weakside of Short-Term Fibonacci Level at 110.133

The Dollar/Yen is trading lower early Monday as fears of rising inflation and a relentless surge in coronavirus cases soured investor risk appetite, making the safe-haven Japanese Yen a more attractive investment.

Lower Treasury yields and Covid-driven risk aversion are the catalysts driving the price action today

At 06:31 GMT, the USD/JPY is trading 109.965, down 0.121 or -0.11%.

According to Reuters, global economic growth is beginning to show signs of fatigue while many countries, particularly in Asia, are struggling to curb the highly contagious Delta variant of the coronavirus and have been forced into some form of lockdown. The specter of elevated inflation, while the market has long feared, is also haunting investors.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 109.535 will signal a resumption of the downtrend. A move through 111.659 will change the main trend to up.

The minor trend is also down. A trade through 109.715 will indicate the downside momentum is getting stronger. A trade through 110.698 will change the minor trend to up. If sellers take out 109.715 then 110.342 will become a new minor top.

The short-term range is 109.192 to 111.659. The USD/JPY is currently trading on the weak side of its retracement zone at 110.133 to 110.426. This is potential resistance.

On the downside, the major support is a retracement zone at 109.569 to 109.076. The upper level of this retracement zone stopped the selling at 109.535 on July 8.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Monday is likely to be determined by trader reaction to the Fibonacci level at 110.133.

Bearish Scenario

A sustained move under 110.133 will indicate the presence of sellers. If this creates enough downside momentum then look for a test of 109.715, followed by 109.569 to 109.535. The latter is a potential trigger point for an acceleration to the downside with 109.192 to 109.076 the next likely downside target area.

Bullish Scenario

A sustained move over 110.133 will signal the presence of buyers. This could trigger the start of a labored rally with a series of levels at 110.342, 110.426 and 110.597 the next potential upside targets. Since the main trend is down, sellers are likely to re-emerge on a test of this area.

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

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.