The dollar / yen is slightly higher on Wednesday after hitting its highest level in more than five years in the previous session. The Forex pair’s rise is driven by expectations of an earlier-than-expected rate hike by the Federal Reserve to cool an overheated economy.

On Tuesday, US Treasury yields rose after the release of a stronger-than-expected US retail sales report and hawkish comments from St. Louis Fed Chairman James Bullard. The spread between US government yields and Japanese government yields widened as a result of the news, making the US dollar a more attractive asset than the Japanese yen.

At 07:43 GMT, USD / JPY is trading at 114.862, up 0.028 or + 0.02%.

Daily USD / JPY

Technical analysis of the daily swing chart

The main trend is upward on the daily swing chart. A trade through the intraday high at 114.969 will signal a resumption of the uptrend. A move through 113.758 will change the main trend down.

The closest resistance is the March 10, 2017 main high at 115.501 and the January 19, 2017 main high at 115.615.

The minor range is 113.758 to 114.969. Its level of 50% at 114.364 is potential support.

The second minor range is 112.728 to 114.969. His retracement area at 113.849 to 113.584 is another potential support area.

Technical forecasts of the daily swing chart

The direction of the USD / JPY on Wednesday will likely be determined by the reaction of traders at 114.834.

Bullish scenario

A sustained move above 114.834 will indicate the presence of buyers. Elimination of the intraday high at 114.969 will indicate buying strengthens. If this creates enough bullish momentum, the USD / JPY could accelerate higher with potential targets of 115.501 to 115.615.

Bearish scenario

A sustained move below 114.834 will signal the presence of sellers. The move to the weak side of the old high at 114.728 will indicate that the sell is strengthening. This could trigger a breakout towards 114.364.

Since the main trend is up, look for buyers on the first test of 114.364. If that level fails as support, look for potential downward acceleration with the next targets clustered at 113.849, 113.758 and 113.584.