Plummets to new multi-month lows around 103.60

• USD / JPY witnessed some aggressive selling on Thursday and fell to its lowest level since March.
• A sustained break below 104.00 now supports the prospects for an extension of the slide.
• The attempted recovery move now could be seen as an opportunity to initiate new bearish positions.

The pair USD/JPY It continued to lose ground during the early North American session and fell to its lowest level since March 12, around the 103.60 region in the last hour. Given the sudden rejection drop from the 50-day SMA, a convincing breakout of 104.00 was seen as a key trigger for bearish traders and compounded the selling pressure.

However, the extreme oversold conditions on the one-hour chart prevented traders from making any new bearish bets and helped limit any further losses, at least for the time being. Investors also seem reluctant to place bets and may now prefer to wait before the FOMC’s latest monetary policy decision, to be announced later during the US session.

That said, the short-term bias appears to lean firmly in favor of bearish traders and supports the prospects for an extension of the downward trajectory. Therefore, any attempted recovery towards the breakout point of the 104.00 support could now be seen as a selling opportunity. It seems more likely that the USD / JPY pair will move lower to test the 103.00 level.

Conversely, the move past the aforementioned support-turned-resistance could trigger a short-coverage bounce towards the 104.75-80 bid zone. This is closely followed by the key psychological 105.00 level and the overnight swing highs, around the 105.40 region, which if decisively broken above will negate any short-term bearish bias for the USD / JPY pair.

Daily chart