USD/JPY Forex Technical Analysis – Hovering Under 24-Year High Ahead of Powell Remarks

The Dollar/Yen is trading a little higher early Thursday after reaching a 24-year high of 144.99 in the previous session.

The dollar resumed its rise in Asia after retreating from the more-than-two-decade high on Wednesday, as investors pondered the path of global monetary policy ahead of a European Central Bank rate decision and comments from Federal Reserve Chair Jerome Powell later in the day.

At 04:05 GMT, the USD/JPY is trading 143.818, up 0.056 or +0.04%. On Wednesday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $65.03, down $0.46 or -0.70%.

Looking Ahead…

Powell is scheduled to participate in a discussion at a Cato Institute conference, with Fed officials soon to enter into a blackout period prior to the U.S. central bank’s Sept. 20-21 meeting.

On Wednesday, the hawkish rhetoric from Fed members continued, with Boston Fed President Susan Collins saying that bringing inflation back down to 2% is the Fed’s “Job One,” while Fed Vice Chair Lael Brainard commented that tight monetary policy will continue “for as long as it takes to get inflation down.”

Although we could see some counter-trend trading over the next two weeks, the overall uptrend remains strong with money markets putting the odds of another 75 basis point rate hike by the Fed at 79%. This would increase the Fed Funds rate from 3.0% to 3.25%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 144.991 will signal a resumption of the uptrend. A move through 131.734 will change the main trend to down. This is highly unlikely, but there is room for a normal retracement.

The minor trend is also up. A trade through 135.809 will change the minor trend to down. This will shift momentum to the downside.

The minor range is 135.809 to 144.991. Its 50% level at 140.400 is the first downside target. The short-term 50% target is 137.702.

Daily Swing Chart Technical Forecast

Trader reaction to 143.762 is likely to determine the direction of the USD/JPY on Thursday.

Bullish Scenario

A sustained move over 143.762 will indicate the presence of buyers. The first upside target is 144.991. This is a potential trigger point for an acceleration to the upside with no objective in the picture.

Bearish Scenario

A sustained move under 143.762 will signal the presence of sellers. Taking out 142.679 will make 144.991 a new minor top. If this move creates enough downside momentum then look for the selling to possibly extend into the pivot at 140.400 over the near-term.

Side Notes

Taking out 144.991 then closing below 143.762 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day counter-trend move.