- The USD/JPY pair came under some renewed selling pressure on Tuesday and extended the previous session’s pullback from the 108.75-80 supply zone.
- The downfall has now dragged the pair back towards a short-term ascending trend-line support extending from five-month lows touched early this month.
Meanwhile, the pair has been oscillating within a broader trading range over the past one week or so, forming a rectangular chart pattern. A rectangle is a continuation pattern that forms as a trading range during a pause in the trend – bearish in this case.
Moreover, technical indicators on the daily chart have managed to recover from the oversold territory and again started gaining negative traction on the 4-hourly chart, reinforcing the near-term bearish set-up and increasing prospects for an eventual breakdown.
However, traders are likely to wait for a sustained weakness below the 108.00 round figure mark before positioning for any further near-term depreciating move ahead of the next big event risk – the latest FOMC monetary policy update, scheduled to be announced on Wednesday.
USD/JPY 4-hourly chart