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I’ve still got my eye on USD/JPY early this week, but I’m looking out for this bearish setup this time.

Will the pair’s post-NFP downside momentum pick up again?

Before we look at the setup, check out the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • FOMC member Evans’ speech at 7:00 pm GMT

What to Watch: USD/JPY

USD/JPY 1-hour Forex Chart
USD/JPY 1-hour Forex Chart

Thanks to the dismal April NFP numbers, USD/JPY crashed below support at the 109.00 handle last Friday.

Can price go any lower from here?

The pair is now in the middle of a correction and could find some sellers at the short-term falling trend line that has been holding so far this month. This happens to line up with the former support zone, which could now hold as a ceiling.

Technical indicators suggest that the correction could keep going until this area of interest, as the 100 SMA is above the 200 SMA but prepping for a bearish crossover.

Meanwhile, Stochastic is heading north but closing in on the overbought zone to signal exhaustion among buyers.

Even though there are no major reports due from Uncle Sam today, the bearish momentum from the jobs data disappointment could resume as traders start pricing in expectations for the CPI and retail sales reports later on.