USD/JPY drop looks set to continue, key downside levels come into focus

<p>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.</p><p>The yen had been due for a correction but there is also <a href="https://www.forexlive.com/news/higher-japanese-yields-tees-up-potential-for-another-boj-disappointment-20230712/" target="_blank" rel="follow">this factor</a> to consider in the latest run higher for the Japanese currency.</p><p>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.</p><p>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.</p><p>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.</p>

This article was written by Justin Low at www.forexlive.com.