The drop yesterday came as dollar softened after a dreadful US services PMI data but it also coincided with some technical resistance around the 27 July high at 137.46. Buyers stepped back in closer to the 136.00 level and we are now caught in between those two technical regions at the moment.
The positive backdrop for buyers at the moment is that bond yields bounced back strongly in the aftermath of yesterday's poor data. US 10-year yields are still keeping above 3% and that will be encouraging for an upside push in USD/JPY if it keeps that way.
That said, all eyes are now on Fed chair Powell's speech at Jackson Hole to really get markets moving again. Until then, we might very well see some consolidation and that will leave a lot to be desired for USD/JPY in the meantime as well.
In the big picture, buyers are still chasing a push back towards 140.00 while sellers are hoping to invalidate the recent advance by targeting a break back below 135.00.
