USDJPY rotated aggressively to the downside after crawling as high as 109.84 on Friday, slumping below the ascending trendline drawn from the 101.17 bottom and back into the 107.00 zone.
The pair erased four green candles and the spotlight is now on the 23.6% Fibonacci retracement level of the short-term downleg from 111.70 to 105.97, which is intersecting with the upper surface of the Ichimoku cloud at 107.33. If the bears manage to remove this obstacle, confirming the negative signals the RSI and the MACD are currently providing, the selling pressure could strengthen towards the 106.40-105.97 region. Lower, the 105.00 round-level could be the next target.
On the other hand, if the price bounces on 107.33, it should rally back above the ascending trendline and the 200-day simple moving average (SMA) at 108.45 to wipe out the bearish bias. Following up, additional upside corrections could bring the 61.8% Fibonacci of 109.50, which the bulls failed to successfully overcome last week, back into view. In case of another winning battle at this point, the bullish run could stretch into the 110.20-110.85 former resistance region.
Turning to the medium-term picture, the neutral outlook remains intact as long as the price fluctuates between 112.21 and 101.17.
Summarizing, USDJPY may come under renewed selling pressure if it closes below 107.33. Otherwise, the pair may attempt to return above the ascending trendline.
