Forex USD / JPY Technical Analysis – Rangebound with resistance at 110.191, support at 109.569
The dollar / yen edged higher on Monday morning as risk appetite improved with the rise in major US stock indexes and higher yields on Treasuries.
The movement of stock market indices brings into play the carry trade. This is a strategy in which US investors borrow yen from Japanese banks and then sell the yen to buy the dollars they need to invest in US stocks.
Meanwhile, the higher yields of the US Treasury are helping to widen the spread between US government bonds and Japanese government bonds, making the US dollar a more attractive investment.
At 03:50 GMT, USD / JPY is trading at 109.858, up 0.066 or + 0.06%.
Technical analysis of the daily swing chart
The main trend is up according to the daily swing chart, however, the bullish momentum has been struggling for the past two weeks.
A trade through 110,800 will signal a resumption of the uptrend. A move to 109.114 will change the main trend down.
On the downside, support is a retracement area at 109.569 to 109.076.
On the upside, first resistance is a minor pivot at 109.957, followed by a short term retracement area at 110.191 to 110.537.
Technical forecasts of the daily swing chart
The direction of USD / JPY on Monday will likely be determined by traders’ reaction to the pivot at 109.957.
A sustained move above 109.957 will indicate the presence of buyers. This could lead to a painstaking rally with potential targets lined up at 110.191, 110.222 and 110.537.
A sustained move below 109.957 will signal the presence of sellers. This could trigger a retest of the support at 109.569. This is also a potential trigger point for a downward acceleration with the next likely target of 109,114 to 109,076.
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This article originally appeared on FX Empire