GBPJPY has been on a steady decline and it looks like this quick correction could pull more sellers in. Price is testing the 38.2% Fib but might still go for a larger retracement to the area of interest.

In particular, the broken support area around the 135.00 major psychological mark lines up with the 61.8% Fibonacci retracement level and is close to the 200 SMA. This might be the line in the sand for a correction, as a break higher could signal that a reversal is due. If any of the Fibs keep gains in check, GBPJPY could slide back to the swing low near the 133.00 handle.

The 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. The 100 SMA already seems to be holding as dynamic resistance near the 50% Fib.

Stochastic is heading south, so price could follow suit as bearish momentum stays in play. The oscillator still has some room before reflecting oversold conditions or exhaustion among sellers, so bearish pressure could carry on for a bit longer.

RSI is also on the move down without even hitting the overbought zone, suggesting that sellers are eager to return.

Sterling has been on a lot of downside pressure in the past week on account of Brexit talks falling through. This could mean more complications for the UK economy, which is already grappling with the impact of the pandemic on business and consumer spending.

Meanwhile, the yen has been able to benefit from risk aversion, although the pickup in optimism earlier this week has spurred some profit-taking. A return in risk-off flows as traders continue to focus on geopolitical risks and COVID-19 updates could mean more upside for the safe-haven currency.