The USD/JPY dropped sharply today and is almost to reach another downside target. It has dropped as much as 108.49 level, but seems poised to reach fresh new lows as the USDX has dropped again today and may resume the bearish movement.

I’ve said in the last week that the rate should drop further after the false breakout above a very strong dynamic resistance. The Yen has taken the lead on the short term as the Nikkei stock index is trading in the red again after the failure to breakout above a dynamic resistance.

The JP225  is pressuring a dynamic support and is almost to take it out, a valid breakdown will signal a further drop and a Yen’s dominance. Technically, the Nikkei should drop further after three breakout attempts.

The Yen increased further even if the Japanese data have failed to impress today, the SPPI increased by 0.8%, matching expectations, the Tokyo Core CPI increased only by 0.7%, less versus the 0.8% estimate and versus the 0.8% growth in the former reading period, while the National Core CPI increased by 0.9%, matching expectations as well.

On the other hand, the USD drops further as the US data have disappointed today, I’ve said that only some good numbers will boost the USD on the short term.

The rate should reach the 350% Fibonacci line (ascending dotted line) where it could find temporary support. Support can be found at the first warning line (wl1) of the minor ascending pitchfork as well. Technically, it is somehow expected to be attracted by the third warning line (wl3) of the former descending pitchfork after the false breakout above the fourth warning line (wl4) of the descending pitchfork.

Only a rejection from the 350% Fibonacci line will signal a minor rebound. Right now is premature to talk about a rebound because the USD is under massive selling pressure and we don’t have any reversal signal.