USD/JPY Forex Technical Analysis – Sustained Move Over 113.173 Could Trigger Rally into 114.029 – 114.380

The Dollar/Yen is edging higher on Thursday, boosted by firmer U.S. Treasury yields and a slight shift in investor sentiment. Fundamentally, investors appear to be cautious following the report of the first case of omicron in the United States, but not enough to fuel another flight-to-safety move into the Japanese Yen. Meanwhile, the dollar is getting support from renewed expectations for interest rates hikes.

At 07:55 GMT, the USD/JPY is trading 113.302, up 0.513 or +0.45%.

Federal Reserve chair Jerome Powell signaled the central bank may speed up the pace of its bond-buying taper at its meeting later this month. He also told lawmakers it was time to retire his description of price pressures as transitory.

In other news, investors shed riskier assets and sought protection in the Japanese Yen after the CDC confirmed that the omicron variant has made its way to the U.S., with the first confirmed case in California.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 112.538 will signal a resumption of the downtrend. A move through 115.519 will change the main trend to up.

The main range is 110.826 to 115.519. Its retracement zone at 113.173 to 112.619 is currently being tested. Counter-trend traders have been trying to form a support base inside this zone for five sessions.

The short-term range is 115.519 to 112.538. Its retracement zone at 114.029 to 114.380 is the primary upside target.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to 113.173.

Bullish Scenario

A sustained move over 113.173 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a surge into 114.029 to 114.380.

Since the main trend is down, sellers are likely to come in on a test of 114.029 to 114.380. They are going to try to form a potentially bearish secondary lower top.

Bearish Scenario

A sustained move under 113.173 will signal the presence of sellers. This could trigger a break into the Fibonacci level at 112.619, followed by this week’s low at 112.538. This is a potential trigger point for an acceleration to the downside.