Early in the American session, the Japanese Yen is trading at around 137.50 with a bearish bias but it is limited by the support of 8/8 Murray.

After breaking the 21 SMA (138.44), the pair accelerated its decline towards the area of 137.50. The bearish move is likely to continue and the price may reach the bottom of the downtrend channel at around 136.80.

Last week, several FOMC members dispelled market expectations of a 100-basis point rate hike at the next meeting on July 26-27. This favored the recovery of the yen and it strengthened away from the high of 139.38.

Another factor that may help the USD/JPY pair recover is that the dollar index is pulling back and is now trading at around 106.25. A break of this support could benefit USD/JPY and it will fall to 7/8 Murray at 135.93.

On the 4-hour chart, USSD/JPY shows an uptrend, despite signs of losing strength after hitting a 24-year high of around 139.38.

The bullish bias could resume if the Yen rebounds above 137.50 or returns above the 21 SMA located at 138.44.

As long as the uptrend channel remains intact, the currency pair is likely to resume its main uptrend and could reach the psychological level of 140.00. The break of this level of 140.00 will be open for a challenge towards the high of August 1998 at 147.67.

The chart above shows the current price level of the Yen. We can buy the pair if it bounces above 137.50. Or we can sell in case of a pullback towards the 21 SMA around 138.44. If the price breaks this level, USD/JPY could reach +1/8 Murray around 139.08.

On the other hand, if bearish pressure prevails, the first support for USD/JPY would be 8/8 Murray at 137.50. A break below that level will drop towards the bottom of the uptrend channel at 136.75. A break below will expose the daily high of June 29 at 137.00, and tte pair could finally stop the decline at 7/8 Murray around 135.93.