USD/JPY Forex Technical Analysis – Hawkish Fed Member Comments Lend Support

The Dollar/Yen is trading higher late Friday as traders contemplated improving U.S. consumer and producer inflation data against hawkish comments from Federal Reserve policymakers who signaled to investors the fight against rising prices is far from over.

The improvement in both the consumer price index (CPI) and the producer price index (PPI) may have driven the Dollar/Yen sharply lower, but the hawkish comments from Fed members following the news fueled strong rebound rallies. This indicates it’s going to be difficult to keep the greenback down for very long as long as the Fed is still raising rates.

At 18:58 GMT, the USD/JPY is trading 133.503, up 0.523 or +0.39%. The Invesco CurrencyShares Japanese Yen Trust is at $70.08, down $0.19 or -0.27%.

Friday’s price action was fueled primarily by San Francisco Federal Reserve Bank President Mary Daly who said on Thursday she was open to the possibility of another 75 basis point hike in September.

Despite the Fed’s hawkish plans, the market seems to think that a 50-basis-point rate hike is in the cards for the September 21 policy meeting.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 130.412 will signal a resumption of the downtrend. A move through 135.568 will change the main trend to up.

The main range is 126.362 to 139.389. Its retracement zone at 132.876 to 131.338 is support. This zone stopped the selling on Thursday at 131.734.

The minor range is 135.568 to 131.734. Its 50% level or pivot at 133.651 is resistance.

The short-term range is 139.389 to 130.412. Its retracement zone at 134.901 to 135.960 stopped the rally at 135.568 on August 8.

Short-Term Outlook

Trader reaction to the minor pivot at 133.651 and the main 50% level at 132.876 is likely to determine the direction of the USD/JPY into the close on Friday.

Bullish Scenario

A sustained move over 133.651 will indicate the presence of buyers. This could trigger an acceleration into the short-term 50% level at 134.901.

Bearish Scenario

A sustained move under 132.876 will signal the presence of sellers. This could trigger a late session break into the minor bottom at 131.734.

Read More: USD/JPY Forex Technical Analysis – Hawkish Fed Member Comments Lend Support

2022-08-12 22:34:00

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