USD/JPY Price Analysis: Turns south to test 100-SMA amid risk-aversion

• USD/JPY is back in the red amid a renewed risk-off wave.
• Rejection above 21-SMA calls for a retest of 100-SMA on the 4H chart.
• RSI has pierced through the midline, more downside likely?

USD/JPY is trading below 114.00, having witnessed a sharp 60-pips drop in the last hour after a renewed risk-aversion wave gripped markets on the covid resurgence in the Euro area.

Austria announced a nationwide lockdown from Monday while Germany stated that it is in a national emergency state, due to the resurgence of the coronavirus in the bloc, which has triggered a flight to safety in the Japanese yen.

Although the downside remains cushioned amid a broadly strong US dollar, which also attracts the safe-haven flows.

Looking ahead, the covid updates and Fedspeak will be closely eyed for fresh trading impetus on the major.

Looking at USD/JPY’s four-hour chart, the price came under massive selling pressure after it ran into strong offers once again just above the ascending 21-Simple Moving Average (SMA) at 114.38.

The latest sell-off has taken out the bullish 50-SMA support at 114.00, as bears now challenge the critical horizontal 100-SMA at 113.87.

A four-hourly candlestick closing below the latter will expose the upward-sloping 200-SMA support at 113.64.

The Relative Strength Index (RSI) has pierced through the midline, currently pointing south and allowing more room for declines.

USD/JPY: Daily chart

Any rebound will challenge the 50-SMA support-turned-resistance, above which the 21-SMA barrier will be back in play.

If the bulls succeed in recapturing the 21-SMA, then a retest of the daily highs at 114.54 could be in the offing.

USD/JPY: Additional levels to consider