- USD/JPY extends the recent pullback from multi-month tops.
- Slightly oversold conditions warrant some caution for bears.
The USD/JPY pair witnessed some follow-through selling for the third consecutive session on Thursday and retreated further from multi-month tops set last week.
The ongoing downward trajectory to near two-week lows has now dragged the pair below the 109.70 support zone – a previous strong horizontal resistance breakpoint.
A subsequent break through the 23.6% Fibonacci level of the 107.65-110.30 recent positive move might have already set the stage for an extension of the corrective slide.
Meanwhile, technical indicators on the daily chart have moved on the verge of breaking into the negative territory and add credence to the near-term bearish outlook.
However, oscillators on hourly charts are already flashing slightly oversold conditions and seemed to be the only factor holding investors from placing any aggressive bearish bets.
Hence, any follow-through weakness might attract some buying interest near 38.2% Fibo. level, around the 109.30 region, and should help limit the downside near 50-day SMA.
USD/JPY daily chart