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  • USD/JPY added to the previous day’s losses below a descending triangle support.
  • Slightly oversold conditions warrant some caution for bears ahead of NFP report.
  • Any recovery attempt might be seen as a selling opportunity and remain capped.

The USD/JPY pair failed to capitalize on its early attempted recovery move, instead met with some fresh supply near the 103.75 region and added to the previous day’s losses. The downward trajectory extended through the mid-European session and dragged the pair to its lowest level since March 12, around the 103.20-15 region in the last hour.

The overnight slide below the 104.00 round-figure mark confirmed a near-term bearish breakthrough a descending triangle support and prompted some follow-through technical selling amid sustained USD weakness. Apart from this, a softer risk tone in the equity markets benefitted the safe-haven Japanese yen and further contributed to the ongoing downfall.

Meanwhile, technical indicators on hourly/daily charts are already flashing slightly oversold conditions and warrant some caution before placing fresh bets. Investors might also be reluctant to position for big movements on the back of the uncertain US political environment and ahead of the release of the closely-watched US monthly jobs report.

Hence, any subsequent fall is more likely to find decent support near the 103.00 round-figure mark. That said, some follow-through selling below the mentioned level should pave the way for a further decline. The USD/JPY pair might then turn vulnerable to prolong the bearish trend and accelerate the slide further towards testing the 102.35-30 support zone.

On the flip side, any meaningful recovery attempt might now be seen as a selling opportunity near mid-103.00s. This is closely followed by daily swing highs, around the 103.75 region and the 104.00 support breakpoint, which should act as a stiff hurdle and cap the upside for the USD/JPY pair, at least for the time being.

USD/JPY daily chart

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Technical levels to watch