USD/JPY Forex Technical Analysis – Strengthens Over 106.306, Weakens Under 106.077

The Dollar/Yen is trading nearly flat early Friday as investors position themselves ahead of the U.S. Non-Farm Payrolls report, due to be released at 12:30 GMT.

On Thursday, the Forex pair traded mostly higher early in the session as buyers continued to try to claw back last Friday’s steep plunge that was fueled by the surprise resignation of Prime Minister Shinzo Abe.

Positive U.S. economic data also elevated hopes for a quick recovery, making the U.S. Dollar a more attractive investment. The number of Americans filing new claims for unemployment benefits fell below 1 million last week for the second time since the COVID-19 pandemic started in the United States, but to some, that does not signal a strong recovery in the labor market.

Sellers came in late in the day to drive the Dollar/Yen lower into the close as investors sought protection in the Japanese Yen because of a steep sell-off in the U.S. stock market.

At 04:11 GMT, the USD/JPY is trading 106.176, down 0.008 or -0.01%.

On Friday at 12:30 GMT, traders will get the opportunity to react to the latest U.S. Non-Farm Payrolls data. The report is expected to show the economy added 1.4 million jobs in August, which would be slower than the 1.763 million jobs created in the previous month.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, the momentum is drifting higher. Taking out 107.049 will change the main trend to up. A trade through 105.104 will signal a resumption of the downtrend.

The short-term range is 107.049 to 105.104. The USD/JPY is currently straddling its retracement zone at 106.077 to 106.306.

The main range is 104.189 to 107.049. Its retracement zone at 105.619 to 105.282 is support.

The major resistance is the 50% level at 107.019.

Daily Swing Chart Technical Forecast

Based on the early price action and the current price at 106.176, the direction of the USD/JPY on Friday is likely to be determined by trader reaction to the short-term 50% level at 106.077.

Bullish Scenario

A sustained move over 106.077 will indicate the presence of buyers. This could trigger a quick rally into the Fibonacci level at 106.306. This level is a potential trigger point for an acceleration to the upside with the next major targets coming in at 106.948, 107.019 and 107.049.

Bearish Scenario

A sustained move under 106.077 will signal the presence of sellers. This is a potential trigger point for an acceleration to the downside with the 50% level at 105.619 the next likely downside target.