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  • USD/JPY witnessed some aggressive selling on Thursday and dived to its lowest level since March.
  • A sustained break below the 104.00 mark now supports prospects for an extension of the downfall.
  • Attempted recovery move might now be seen as an opportunity to initiate fresh bearish positions.

The USD/JPY pair continued losing ground through the early North American session and tumbled to its lowest level since March 12, around the 103.60 region in the last hour. Given the overnight rejection slide from 50-day SMA, a convincing break through the 104.00 mark was seen as a key trigger for bearish traders and aggravated the selling pressure.

However, extremely oversold conditions on the 1-hourly chart held traders from placing fresh bearish bets and helped limit any further losses, at least for the time being. Investors also seemed reluctant and might now prefer to wait on the sidelines ahead of the latest FOMC monetary policy decision, scheduled to be announced later during the US session.

That said, the near-term bias seems tilted firmly in favour of bearish traders and supports prospects for an extension of the downward trajectory. Hence, any attempted recovery back towards the 104.00 support breakpoint might now be seen as a selling opportunity. The USD/JPY pair seems more likely to slide further towards testing the 103.00 round-figure mark.

Conversely, movement beyond the mentioned support-turned-resistance might trigger a short-covering bounce towards the 104.75-80 supply zone. This is closely followed by the key 105.00 psychological mark and the overnight swing highs, around the 105.40 region, which if cleared decisively will negate any near-term bearish bias for the USD/JPY pair.

USD/JPY daily chart

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Technical levels to watch