USD/JPY Forex Technical Analysis – Consolidating Inside 109.223 – 109.634 Ahead of Friday’s US Jobs Report

The Dollar/Yen is edging higher on Thursday while consolidating for a third session ahead of a key U.S. jobs report that may provide clues on when the Federal Reserve will dial back monetary stimulus. This follows weakness on Wednesday that was fueled by a dip in U.S. Treasury yields.

U.S. Treasury yields held steady on Wednesday after private payrolls data showed employers continued to add positions back at a steady clip during the month of April.

At 08:04 GMT, the USD/JPY is trading 109.364, up 0.167 or +0.15%.

Private jobs growth accelerated in April but fell a bit short of lofty Wall Street expectations, according to a report Wednesday from ADP. Additionally, the ISM Services PMI report came in at 62.7, down from the previously reported 63.7 and below the 64.2 forecast.

In other news, Bank of Japan (BOJ) policymakers agreed on the need to focus on keeping interest rates stably low while the economy remains under the strain caused by the COVID-19 pandemic, minutes of the central bank’s meeting showed on Thursday.


Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, but momentum is trending higher. The USD/JPY was in the midst of a six-session counter-trend rally when a closing price reversal top on Monday stopped the move cold.

A trade through 109.698 will negate the closing price reversal top and signal a resumption of the counter-trend rally.

The main tend changes to up on a trade through 110.966. A move through 107.479 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through 109.698 will signal a resumption of the uptrend. The minor trend will change to down on a move through 108.435.

The short-term range is 110.966 to 107.479. Its retracement zone at 109.223 to 109.634 is currently being tested.

Minor range support is a pair of 50% levels at 108.720 and 108.589. They are followed by a major Fibonacci level at 108.230.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to 109.223.

Bullish Scenario

A sustained move over 109.223 will indicate the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into 109.634, followed by 109.698.

Bearish Scenario

A sustained move under 109.223 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with 108.720 the next potential downside target.

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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.