The currency pair dropped aggressively today and resumes the bearish movement as the USDX and the Nikkei stock index dropped significantly today as well. USD/JPY is into a corrective phase on the daily chart and looks motivated to resume it on the short term because it could still be attracted by a dynamic support. We’ll see what will really happen because the USDX is trading right above a very strong and crucial support area. A valid breakdown will signal a larger USD’s depreciation. Price is driven by the technical factors as we have a very poor economic calendar today. The Japanese SPPI increased only by 0.8% in the previous month, less versus the 0.95 estimate and the 0.9% growth in the former reading period.

I’ve added the JP225 chart to show you why the Yen has increased versus the greenback on the short term. You can see that has come back to retest the lower median line (LML) of the major ascending pitchfork. A further drop in the upcoming days will signal that the Japanese Yen will appreciate further versus its rivals. I’ve said in the last days that it could drop to retest the 150%Fibonacci line (ascending dotted line). A larger increase will be confirmed only after a valid breakout above the third warning line (WL3) of the descending pitchfork.

The currency pair dropped after the retest of the 38.2% retracement level, the next downside target will  be at the lower median line (lml) of the ascending pitchfork. Remains to see how will react when will hit this level, a valid breakdown will signal a further drop towards the second warning line (wl2) of the ascending pitchfork.

We may have a buying opportunity if the lower median line will hold and if will reject the rate, or if the rate will increase again without retesting the lower median line (lml).

Technically is somehow expected to approach and reach the third warning line (WL3) of the former major descending pitchfork.