The dollar / yen posted a modest gain on Tuesday on relatively weak volume, as hopes for a coronavirus vaccine were offset by fears of more lockdowns and restrictions linked to COVID-19 that could derail the global economic recovery current. Traders were also awaiting clues from Congress as to the size and timing of the next fiscal stimulus package.
As of 21:54 GMT, USD / JPY is trading 104.154, up 0.109 or + 0.10%.
Separately, Japan on Tuesday announced a new $ 708 billion economic stimulus package to accelerate recovery from the country’s deep recession due to coronaviruses, while targeting investments in new areas of growth such as green innovation. and digital.
The dollar also appreciated against the Japanese yen in response to the strength in the US stock markets. Major US stock indexes hit new all-time highs on Tuesday as Pfizer began rolling out its coronavirus vaccine in the UK, raising hopes of an economic recovery in the near future.
Technical analysis of the daily swing chart
The main trend is downward according to the daily swing chart. A trade through 103.653 will signal a resumption of the downtrend. The main trend will evolve higher when rising to 104.751.
The short-term range is 103.177 to 105.677. The USD / JPY has been straddling its retracement area at 104.427 to 104.132 for almost a month.
The primary range is 107.049 to 103.177. If the main trend turns higher, its retracement area at 105.113 to 105.570 will become the main bullish target.
The direction of the USD / JPY in the short term will likely be determined by the reaction of traders to the short term Fibonacci level at 104,132.
A sustained move above 104.132 will indicate the presence of buyers. This could trigger a spike in the near-term 50% level at 104.427. Exceeding this level will indicate buying to strengthen with the next targets of a pair of major highs at 104.751 and 104.761.
Withdrawing 104.761 will change the main trend upward. This could extend the rally into the 50% main level at 105,133.
A sustained move below 104.132 will signal the presence of sellers. If this move creates enough downside momentum, look for the sell to eventually expand to a low at 103.673, followed by a major low at 103.653.
The removal of 103.653 will confirm the downtrend with 103.177 the next likely downside target.
For an overview of all of today’s economic events, check out our economic calendar.