• USD/JPY snaps three-day uptrend while retreating from the highest levels in three weeks.
• RSI’s pullback from overbought territory adds strength to the downside bias.
• Convergence of one-week-old ascending trend line, 50-SMA restricts Yen pair’s short-term fall.
• Bears need validation from 12-day-long upward-sloping trend line to retake control.

USD/JPY drops to 133.40 as bulls take a breather after a three-day uptrend during early Tuesday. In doing so, the Yen pair takes a U-turn from a three-week-old horizontal resistance area, as well as the 200-SMA.

Adding strength to the pullback moves could be the RSI (14) retreat from the overbought territory.

As a result, the Yen pair is well-set for further downside towards the 132.40-35 support confluence including the 50-SMA and one-week-old ascending trend line.

It should be noted, however, that there prevails limited room towards the south for the USD/JPY pair even if it breaks the 132.35 key support. The reason could be linked to an upward-sloping support line from March 24, close to 131.10 by the press time.

In a case where the USD/JPY bears keep the reins past 131.10, and also conquer the 131.00 round figure, the odds of witnessing a fresh 2023 low, currently around 127.20, can’t be ruled out.

On the contrary, the 200-SMA level of 133.60 precedes the aforementioned three-week-old horizontal resistance area surrounding 133.75-85 to limit the short-term upside of the USD/JPY pair.

Following that, the mid-March high of 135.05 acts as an intermediate halt during the likely run-up towards the YTD peak marked in the previous month at around 137.95.

USD/JPY: Four-hour chart

Trend: Limited downside expected