USD/JPY Technical Analysis – Rangebound as US Treasury Yields Flatten After Recent Volatility

The Dollar/Yen is trading lower on Wednesday, reversing yesterday’s rally as the choppy trade continues for a fifth straight session. The price action suggests traders are trying to decide if the risk is on or risk is off.

The five-day counter-trend rally in March 10-year U.S. Treasury notes could also be confusing traders after the recent steep rise in interest rates. Traders seem to wait for yields to make their next move before committing to a direction in the Dollar/Yen. Higher yields will widen the spread between U.S. Treasuries and Japanese Government bonds, making the U.S. Dollar a more attractive investment.

At 07:32 GMT, the USD/JPY is trading 103.745, down 0.160 or -0.15%.

In other news, on Tuesday, U.S. Treasury Secretary nominee Janet Yellen, appearing before the Senate Finance Committee, urged lawmakers to “act big” on the next coronavirus relief package, adding that the benefits outweigh the costs of a higher debt burden. This news gave risk appetite better support, helping to boost the U.S. Dollar.

Daily Swing Chart Technical Analysis


The main trend is up according to the daily swing chart. A trade through 104.398 will signal a resumption of the uptrend. The main trend changes to down on a trade through 102.593.

The minor trend is also up. A trade through 104.198 will indicate the buying is getting stronger. The minor trend will change to down on a move through 103.524.

On the upside, resistance is a series of retracement levels at 104.135, 104.499 and 104.821.

The minor range is 102.593 to 104.398. Its 50% level at 103.496 is potential support and a trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

The price action the last seven sessions suggests the direction of the USD/JPY will be determined by trader reaction to a pair of 50% levels at 103.496 and 104.135.

Bearish Scenario

A sustained move under 103.496 will indicate the presence of sellers. If this move generates enough downside momentum then look for a potential acceleration with 102.593 the next major downside target.

Bullish Scenario

A sustained move over 104.135 will signal the presence of buyers. This could lead to a labored rally with initial targets coming in at 104.198, 104.398 and 104.499.

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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.