USD/JPY Forex Technical Analysis – Strengthens Over 111.813, Weakens Under 111.587

The Dollar/Yen is trading higher on Thursday as heavy and persistent selling is driving the Japanese Yen lower against all of its peers, while generating the biggest moves and volatility seen in months.

The price action suggests that this is more than just safe-haven buying. Some traders are saying the run of dire economic news out of Japan has stirred talk the country is already in recession and that Japanese funds were dumping local assets in favor of U.S. stocks and gold.

At 08:54 GMT, the USD/JPY is trading 111.738, up 0.383 or +0.34%.

The USD/USD soared on Wednesday to a 9-month high as a decline in the number of new coronavirus cases in China and expectations for more policy stimulus boosted investors’ appetite for risk. Strong U.S. economic data that could support the Federal Reserve’s desire to keep interest rates unchanged after lowering borrowing costs three times in 2019, also supported the greenback.

Daily Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier on Thursday when buyers took out yesterday’s high and the May 3, 2019 main bottom at 111.700. The next potential upside target is the April 24, 2019 main top at 112.405.

On the downside the nearest swing chart support is the May 21, 2019 main top at 110.677. The main trend is safe at this time. It will change to down on a trade through the last swing bottom at 108.313.

The steep climb and the prolonged move up in terms of price and time makes the USD/JPY vulnerable to a closing price reversal top. This won’t change the trend to down, but it could alleviate some of the upside pressure for a few days.

Daily Forecast

Based on the early price action, the direction of the USD/JPY the rest of the session on Thursday will be determined by trader reaction to an uptrending Gann angle at 111.813 and the downtrending Gann angle at 111.587.

Bullish Scenario

A sustained move over 111.813 will indicate the buying is getting stronger. This could trigger another spike into 112.405. Overtaking this level will indicate the intense buying is getting stronger.

Bearish Scenario

A sustained move under 111.587 will signal the return of sellers. Turning lower for the session on a trade under 111.355 will indicate the selling pressure is getting stronger. If this move is able to create enough downside momentum then look for the selling to possibly extend into 110.744 to 110.677.