USD/JPY Forecast: Dollar’s sell-off on pause

USD/JPY Current price: 108.39
The poor performance of global equities has interrupted the greenback’s decline.
Investors are cautious amid a scarce calendar and ahead of a fresh catalyst.
USD/JPY retains its bearish tone in the near-term, now needs to pierce 108.00.
The USD/JPY pair recovered some ground and trades near a daily high at 108.54, with the dollar taking a breath after yesterday’s slump, although retaining its intrinsic weakness. Asian and European equities are sharply down, following the lead of Wall Street, which closed in the red after posting record highs on Monday. US Treasury yields ticked higher, but that on the 10-year note hovers around 1.60%, unchanged from the previous close.

The change in the market’s mood seems related to the earnings season, as big names will soon start reporting, spurring profit-taking. Also, speculative interest turned cautious ahead of a fresher catalyst. Meanwhile, Japan published the February Tertiary Industry Index, which resulted at 0.3% MoM, better than the previous -1.7%. The US has a light macroeconomic calendar today and won’t release relevant figures.
USD/JPY short-term technical outlook
The USD/JPY pair retains its near-term bearish stance, despite the intraday advance. The 4-hour chart shows that sellers keep appearing around a firmly bearish 20 SMA, which extends its slide below the longer ones. Technical indicators have corrected extreme oversold conditions before resuming their slides within negative levels. The pair needs to break below the 108.00 figure to resume its decline, while the corrective advance may extend on a clear break above the mentioned 20 SMA, currently around 108.55.

Support levels: 108.00 107.65 107.20

Resistance levels: 108.55 108.90 109.20