The USD/JPY pair witnessed some selling during the early North American session and dropped to a fresh daily low, below the 129.00 round-figure mark in the last hour.
Concerns about slowing global economic growth continued weighing on investors' sentiment, which was evident from a fresh leg down in the equity markets. This, in turn, drove haven flows towards the Japanese yen and exerted some downward pressure on the USD/JPY pair.
From a technical perspective, spot prices, so far, have been struggling to find acceptance above the 100-period SMA on the 4-hour chart. Apart from this, the overnight failure near a two-week-old descending trend-line was seen as a key trigger for bearish traders.
The downside, however, seems cushioned amid modest US dollar strength, bolstered by some follow-through uptick in the US Treasury bond yields. This, along with the Fed-BoJ policy divergence, supports prospects for the emergence of some dip-buying around the USD/JPY pair.
Hence, any subsequent slide is more likely to find decent support near the 128.40 region, marking the 23.6% Fibonacci retracement level of the 131.35-127.52 recent corrective slide. Some follow-through selling would make the USD/JPY pair vulnerable to breaking below the 128.00 mark.
The downward trajectory could further get extended back towards testing last week's swing low, around the mid-127.00s. Failure to defend the latter should pave the way for a further near-term depreciation and drag spot prices to the next relevant support, around the 127.10-127.00 zone.
On the flip side, the 129.00 mark, or the 38.2% Fibo. now seems to cap the immediate upside ahead of the 129.35-129.40 region (50% Fibo. level). This is followed by the descending trend-line, near the 129.60 region and the overnight swing high, near the 129.80 area.
The latter coincides with the 61.8% Fibo. level, which if cleared decisively will negate any near-term negative bias. Some follow-through buying beyond the 130.00 psychological mark will reaffirm the bullish outlook and lift the USD/JPY pair to the 130.45-130.50 supply zone.
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