USD/JPY Forex Technical Analysis – 108.230 Potential Trigger Point for Acceleration to Downside

The Dollar/Yen is trading lower early Friday as futures contracts for the 10-year Treasury note rose in price, suggesting that traders were not expecting another spike in yields on Friday. Yesterday, the Forex pair surged as the benchmark 10-yearTreasury yield broke above 1.7%, its highest level since January of last year.

At 08:03 GMT, the USD/JPY is trading 108.734, down 0.161 or -0.15%.

In other news, earlier today, the Japanese Yen dipped briefly after the Bank of Japan widened its target band for the benchmark yield in a decision that was in line with market expectations.

Following the BOJs decision to widen the target band for the 10-year Japanese government bond yield to 25 basis points around 0% from 20 basis points previously, the Yen briefly weakened past 109 per dollar, before retracing all of that move.

USD/JPYDaily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 109.362 will signal a resumption of the uptrend. The main trend will change to down on a move through the nearest swing bottom at 104.923.

The minor trend is also up. A trade through 108.340 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is 108.340 to 109.362. The USD/JPY is currently straddling its 50% level at 108.851.

The retracement zone at 108.230 to 107.154 is the next potential downside target. It is controlling the near-term direction of the Dollar Yen as well as being a potential support zone.

The direction of the USD/JPY on Friday is likely to be determined by trader reaction to the pivot at 108.851.

Bearish Scenario

A sustained move under 108.851 will indicate the presence of sellers. This could trigger a further break into the minor bottom at 108.340, followed by the Fibonacci level at 108.230.

Since the main trend is up, look for buyers on the first test of 108.230. However, if it fails, we could see an eventual break into the 50% level at 107.154.

Bullish Scenario

A sustained move over 108.851 will signal the presence of buyers. If this move creates enough upside momentum then look for a potential retest of 109.362. In order to trigger this move, yields are going to have to spike sharply higher. Taking out 109.362 could trigger a surge into 109.849.