With a technical breakdown in the dollar across multiple charts, this was one of the first few that set it off. The profit-taking initially near 145.00 helped to keep a limit on dollar appetite before a plunge lower took hold and we got a drop below 140.00 yesterday.
The yen had been due for a correction but there is also this factor to consider in the latest run higher for the Japanese currency.
If markets are indeed placing higher hopes for a BOJ policy tweak in two weeks' time, they may end up being disappointed. However, at least for now with a weaker dollar, USD/JPY downside is still looking like the favoured option.
And from the charts, we are starting to see the confluence of the 100 (red line) and 200-day (blue line) moving averages come into play at 136.97-10. That will be a massive support region to watch for the pair and a break below that will tee up a test of 135.00 again next.
For buyers, that is the key line in the sand that they must hold to retain any decent chance of finding a bounce in the pair over the coming sessions/days.
