- USD / JPY is witnessing some new selling on Monday and falls to fresh multi-month lows.
- The formation of a bearish channel points to a well-established downward trajectory.
The USD / JPY pair continues to lose ground during the first half of the European session and has fallen to fresh multi-month lows, around the 102.70 region in the last hour. The drop is solely due to the sustained sale of the US dollar.
Looking at the technical picture, the USD / JPY has been trending down within a four-month-old descending channel. This points to a well-established downtrend and supports prospects for an extension of the current downside.
That said, the prevailing risk appetite environment could weigh on the safe-haven Japanese yen and help limit losses for USD / JPY. Therefore, any further decline is likely to find decent support near the lower limit of the trend channel.
The mentioned support is currently near the 102.55 region, closely followed by the March daily lows around the 102.35 level. The lack of defense of the mentioned support levels will now be seen as a new trigger for the bears.
The USD / JPY pair could become vulnerable to break below the 102.00 round level and accelerate the slide to test the 2020 lows, around the 101.20-15 region.
On the other hand, the daily highs, around the 103.30 area, now appear to have emerged as strong immediate resistance. A sustained move above this region could trigger some short-term hedging move and push the USD / JPY pair beyond the 104.00 level.
Momentum could extend towards the 104.70-75 resistance zone before the bulls finally aim to regain the key psychological level of 105.00. This last level coincides with the resistance of the trend channel, which should act as a strong barrier for the USD / JPY pair.
USD / JPY daily chart
USD / JPY technical levels
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