USD/JPY Forex Technical Analysis – Trader Reaction to Minor Pivot at 108.851 Sets the Tone

The Dollar/Yen is trading lower early Monday, continuing the downside momentum that began last Monday. Some traders are saying the Yen rose on speculation that Japanese individual investors who have been buying the Turkish Lira recently for its high rates will be forced to cut losses and close out positions.

The Turkish Lira slumped toward a record low versus the U.S. Dollar after President Tayyip Erdogan stunned investors over the weekend by replacing the hawkish central bank governor with a critic of high interest rates.

At 06:06 GMT, the USD/JPY is trading 108.788, down 0.097 or -0.09%.

Worries that the events in Turkey will cause disruptions in other financial markets also supported the U.S. Dollar because of its status as a safe-harbor currency.

USD/JPYDaily Swing Chart Technical Analysis

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

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

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

The USD/JPY is currently trading on the bullish side of the major retracement zone at 108.230 to 107.154. This zone is also controlling the near-term direction of the Forex pair.

The direction of the USD/JPY on Monday 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. If this move creates enough downside momentum then look for a break into 108.340, followed closely by 108.230. We could see a technical bounce on the first test of this area, but a failure to hold 108.230 could trigger an acceleration to the downside with the first new target 107.154.

Bullish Scenario

A sustained move over 108.851 will signal the presence of buyers. If this move generates enough upside momentum then look for the rally to possibly extend into the main top at 109.362, followed by the June 5, 2020 main top at 109.849.