Key support of 102.69 appears to be at risk ahead of Georgia election

• The path of least resistance for USD / JPY looks to the downside.
• The bears threaten the support of the five-month downtrend line at 102.69
• The RSI remains bearish but above the oversold region.

The USD / JPY pair is trailing slightly below the 103 level at the start of the European session on Tuesday, having faced rejection just above Monday’s close of 103.14.

Markets remain concerned about the rise in coronavirus cases and the consequent imposition of tighter restrictions around the world.

On the other hand, coronavirus vaccine optimism and expectations that Democrats could likely gain control of Congress in the critical Georgia runoff elections offer some support for the USD / JPY bulls.

However, from a technical perspective, the bias looks to the downside in the pair. The daily chart shows that the bears have struggled to regain control on Tuesday after posting three consecutive doji candles.

The bears remain prepared to test the support of the five-month downtrend line, now at 102.69.

The 14-day Relative Strength Index (RSI) is pointing lower, in the direction of oversold territory. This suggests that there is scope for further bearish movements.

Also, adding credibility to the bearish bias, the USD / JPY is moving below all major daily moving averages.

A break out of the aforementioned critical support could expose the psychological level of 102.50.

On the other hand, a sustained rally above the daily highs of 103.19 could offer temporary respite for the bulls.

Higher up, Monday’s high of 103.31 could be tested, as the bulls look to regain the bearish 21-day SMA at 103.58.

USD / JPY daily chart

USS / JPY technical levels