- USD / JPY extends the previous day’s losses below the support of a descending triangle.
- Slight oversold conditions warrant some caution for bears ahead of the NFP report.
- Any recovery attempt could be seen as a selling opportunity and remain limited.
The USD / JPY has not been able to capitalize on its initial attempt at a recovery move and has encountered new selling near the 103.75 region, extending the losses of the previous day. The bearish movement has spread throughout the European mid-session and has dragged the pair to its lowest level since March 12, around the 103.20-15 region in the last hour.
The previous day’s break below the round level of 104.00 has confirmed the short-term bearish breakout of a descending triangle support and prompted some technical continuation selling amid sustained USD weakness. Aside from this, a softer risk appetite in stock markets has benefited the Japanese yen as a safe-haven and further contributed to the current slide in the pair.
Meanwhile, technical indicators on the 1-hour and daily charts already show mild oversold conditions and warrant some caution before opening new positions. Investors may also be reluctant to position themselves for big moves due to the uncertain political environment in the US and ahead of the release of the monthly US NFP jobs report.
Therefore, any subsequent decline is likely to find decent support near the round 103.00 level. That being said, some continuation selling below the mentioned level should pave the way for a further decline. The USD / JPY pair could become vulnerable to prolong the bearish move and further accelerate the slide towards the 102.35-30 support zone test.
On the other hand, any significant recovery attempt now could be seen as a selling opportunity near the 103.50 region. This is closely followed by the daily highs, around the 103.75 region and the support breakout point at 104.00, which should act as a stiff obstacle and limit the rise of the USD / JPY pair, at least for now.
USD / JPY daily chart
Credits: Forex Street
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