USD/JPY Price Analysis: Intraday recovery falters near 200 hourly SMA around 135.70 zone

• USD/JPY witnessed selling for the second day in a row and approached the weekly low.
• The overnight break of an ascending trend line and the 200 hourly SMA favors the bears.
• Mixed technical indicators warrant some caution before confirming a short-term top for the pair.

The pair USD/JPY extended its pullback from the 13.00 level, or a new 24-year high hit on Wednesday and witnessed strong selling for the second day in a row on Friday. The corrective decline dragged the pair towards the weekly low, although the bulls showed some resistance below the key psychological level 135.00.

Given the overnight break of an uptrend line from two weeks ago, the subsequent weakness below the 200 hourly SMA was seen as a new trigger for bearish traders. The latter, currently around the 135.70 area, capped the USD/JPY intraday recovery move and should now act as a key point for short-term traders.

The technical indicators, for their part, remain in bearish territory on the hourly charts, although they are still far from confirming a negative bias on the daily chart. Therefore, it is prudent to wait for a strong follow-up of selling before confirming that the USD/JPY pair has topped out and positioning for any further downside moves.

From current levels, any decline below 135.00 will likely find decent support near 134.50, which if broken would trigger a new technical selloff. The USD/JPY pair could then weaken further below the 134.00 round figure and accelerate the decline to test the next relevant hurdle near the 133.60 area.

On the other hand, the push beyond the 135.70 zone (200-hour SMA) seems to face some resistance near the 136.00 round figure. Any further recovery is more likely to attract new sellers and remain capped near the aforementioned rising trendline breakout, now turned resistance, near the 136.35-136.40 region.

USD/JPY 1 hour chart

Technical levels