USD/JPY Price Analysis: Weakens farther below 105.00 mark, fresh multi-week lows ahead of FOMC

• USD/JPY prolonged its bearish trend and tumbled to multi-week lows, below 105.00 mark.
• Extremely oversold conditions on hourly charts warrant some caution for bearish traders.
• Any attempted bounce back above the 105.00 mark might be seen as a selling opportunity.

The USD/JPY pair witnessed some heavy selling for the third consecutive session on Wednesday and dived to seven-week lows, around the 104.80 region in the last hour.

A sustained breakthrough the 105.40 horizontal support was seen as a key trigger for bearish traders. A subsequent weakness below the key 105.00 psychological mark might have already set the stage for an extension of the depreciating move.

However, technical indicators on hourly charts are already flashing oversold conditions and warrant some caution for bearish traders. That said, negative oscillators on the daily chart support prospects for a further near-term downside.

Hence, any attempted bounce back above the 105.00 mark might still be seen as a selling opportunity amid expectations that the Fed will stick to its ultra-accommodative policy stance. This should cap the upside near the 105.40 support breakpoint.

Some follow-through selling below the 104.70 level will reaffirm the bearish outlook. The pair might then accelerate the downfall towards July monthly swing lows, around the 104.20 region, before eventually sliding below the 104.00 mark.

USD/JPY 4-hourly chart

Technical levels to watch