USD/JPY Forecast – Pressured by Profit-Taking

James Hyerczyk

Thu, Jun 9, 2022, 4:44 AM 2 min read

The Dollar/Yen is trading lower on Thursday as investors took profits after the Forex pair hit a 20-year high earlier in the session.

The Japanese currency is being weighed down by a divergence in policy between the hawkish U.S. Federal Reserve and the ultra-dovish Bank of Japan. On Wednesday, Japanese policymakers held fast to their usual line on Yen weakness, stating that rapid moves were undesirable but confounded expectations they may escalate warnings about the sliding currency as it fell to fresh 20-year lows.

At 10:11 GMT, the USD/JPY is at 133.373, down 0.888 or -0.66%. On Wednesday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $69.70, down $0.86 or -1.22%.

The Dollar/Yen is not far from the 135.13 top hit on January 31, 2002, and a break past that would be its lowest since October 1998.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at 134.555 will signal a resumption of the uptrend. A move through 135.13 will reaffirm the uptrend.

A trade through 126.362 will change the main trend to down. This is highly unlikely. However, due to the prolonged move up in terms of price and time, the USD/JPY is ripe for a closing price reversal top.

The minor range is 126.362 to 134.555. Its retracement zone at 130.459 to 129.492 is the nearest support area.

Daily Swing Chart Technical Forecast

Trader reaction to 134.261 is likely to determine the direction of the USD/JPY on Thursday.

Bearish Scenario

A sustained move under 134.261 will indicate the presence of sellers. Taking out 132.551 will form an outside move reversal down. This will indicate the selling pressure is getting stronger. This could put the USD/JPY on course for the retracement zone at 130.459 – 129.492.

Bullish Scenario

A sustained move over 134.261 will signal the presence of buyers. If this creates enough upside momentum then look for a retest of the intraday high at 134.555. Taking out this level could trigger a surge into 135.130.

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This article was originally posted on FX Empire