USD/JPY Forex Technical Analysis – Risk On Targets 102.886, Risk Off Targets 104.282

The Dollar/Yen rose on Friday, boosted by a dip in investor sentiment as the major U.S. stock indexes retreated from record highs on concerns over the lack of progress in U.S. coronavirus fiscal stimulus negotiations, and uncertainty over whether there would be a Brexit deal before the deadline. Investors seemed to shrug off the Bank of Japans monetary policy decisions.

On Friday, the USD/JPY settled at 103.313, up 0.237 or +0.23%.

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Global equity benchmarks slid as investors grew concerned about the stalemate in Congress over a new COVID-19 stimulus package. Worries over Brexit also weighed on sentiment after the European Union warned there were just hours left to strike a deal.

In other news, the Bank of Japan announced on Friday an extension of its COVID-19 loan programs by six months and a surprise review of its policy to consider “further effective and substantive monetary easing,” to conclude by March 2021.

[fx-image src=/2020/12/Daily-USDJPY-5.jpg data-zoom-target=https://responsive.fxempire.com/cdn/n/n/_fxempire_/2020/12/Daily-USDJPY-5.jpg originalWidth=1920 ratio=1.99]Daily USD/JPYDaily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The downtrend was reaffirmed on Thursday when sellers took out the November 6 bottom at 103.177. This put the USD/JPY at its lowest level since March 9 when it hit 101.185 at the start of the pandemic. A move through 102.886 will signal a resumption of the downtrend. A trade through 104.751 will change the main trend to up.

The minor trend is also down. A trade through 104.579 will change the minor trend to up. This will shift momentum to the upside.

The short-term range is 105.677 to 102.886. Its retracement zone at 104.282 to 104.611 is the first upside target zone and potential resistance.

The longer-term range is 107.049 to 102.886. Its retracement zone at 104.968 to 105.459 is a second retracement zone.

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The next move in the USD/JPY will be driven by headlines on risk sentiment.

If risk is off then look for a short-covering rally to possibly extend into 104.282 to 104.611 over the short-run.

If risk is on then look for sellers to try to take out last weeks low at 102.886. This could trigger the start of a longer-term break into 101.185 to 101.179.

For a look at all of todays economic events, check out our economic calendar.