USD / JPY Forex Technical Analysis – Trading on the Weak Side of the Short Term Fibonacci Level at 110.133
The dollar / yen is trading lower on Monday morning as fears of rising inflation and relentless rise in coronavirus cases soured investors’ risk appetite, making the Japanese yen an investment more attractive.
Falling Treasury yields and Covid-induced risk aversion are catalysts for price action today
At 06:31 GMT, USD / JPY is trading at 109.965, down 0.121 or -0.11%.
Global economic growth is starting to show signs of fatigue, according to Reuters, as many countries, particularly in Asia, struggle to curb the highly contagious Delta variant of the coronavirus and have been forced into some form of lockdown. The specter of high inflation, which the market has long feared, also haunts investors.
Technical analysis of the daily swing chart
The main trend is downward on the daily swing chart. A trade up to 109.535 will signal a resumption of the downtrend. A move through 111.659 will change the main trend upward.
The minor trend is also downward. A trade up to 109.715 will indicate that the bearish momentum is strengthening. A trade up to 110.698 will change the minor trend upward. If the 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 area at 110.133-110.426. It is potential resistance.
On the downside, major support is a retracement area at 109.569 to 109.076. The upper level of this retracement area stopped selling at 109.535 on July 8th.
Technical forecasts of the daily swing chart
The direction of the USD / JPY on Monday will likely be determined by the reaction of traders to the Fibonacci level at 110.133.
A sustained move below 110.133 will indicate the presence of sellers. If that creates enough downward momentum, 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 target area on the downside.
A sustained move above 110,133 will signal the presence of buyers. This could trigger the start of a laborious rally with a series of levels at 110.342, 110.426 and 110.597, the next potential targets on the upside. Since the main trend is down, sellers are likely to reappear on a test of this area.