- USD/JPY witnessed a dramatic intraday turnaround from the 107.00 neighbourhood.
- The set-up supports prospects for additional weakness, even below the 105.00 mark.
- Slightly oversold RSI on the 1-hourly chart warrants some caution for bearish traders.
The USD/JPY pair extended its intraday rejection slide from the 107.00 neighbourhood and dropped to fresh weekly lows, around mid-105.00s during the mid-European session. The latter marks monthly ascending trend-line support, which if broken decisively will pave the way for additional weakness amid the heavily offered tone around the USD.
Meanwhile, technical indicators on 4-hourly/daily charts have again started drifting into the negative territory and support prospects for an eventual breakthrough the mentioned support. However, RSI (14) on the 1-hourly chart is already flashing slightly oversold conditions. This, in turn, warrants some caution for aggressive bearish traders.
Hence, it will be prudent to wait for some strong follow-through selling below the mentioned trend-line support before positioning for any further depreciating move. The pair might then accelerate the fall towards monthly lows, just ahead of the key 105.00 psychological mark, en-route the recent daily closing, around the 104.70 region.
On the flip side, any attempted recovery might now confront some fresh supply and remained capped near the 106.00 mark. That said, a sustained strength beyond might trigger a short-covering move and assist the pair to aim back to reclaiming the 107.00 level with some intermediate resistance near the 106.35-55 region.
USD/JPY 4-hourly chart
Technical levels to watch