Early in the American session, USD/JPY is moving lower for the second day in a row. Last week, it reached 139.38, a price level that was seen 24 years ago. The steady intraday decline has extended through the European session and the pair has strengthened reaching a low of 138.00, a level that coincides with the 21 SMA.

A number of influential FOMC members denied that there will be a 100-basis point rate hike at the next policy meeting on July 26-27. This information favored the recovery of the Japanese yen. This week, the currency pair is likely to continue the technical correction and could reach the support of 7/8 Murray at 135.93.

On the other hand, as long as USD/JPY trades within the bullish uptrend channel and above 138.25 (21 SMA), it is likely to reach the psychological level of 140.00 in the next few weeks.

According to the 4-hour chart, we can see that the yen has been trading within the uptrend channel since the beginning of July. Apparently, a sharp break below this channel could mean a change in trend in the short term.

138.00 is the key. If the yen trades below this level, there could be a bearish acceleration towards 8/8 Murray at 137.70 and up to 7/8 Murray at 135.93.

On July 13, the eagle indicator reached the extremely overbought zone. In the coming days, USD/JPY is likely to continue with the technical correction. The bottom line is to wait for a daily close below 138.20 to buy. If so, the price could hit the 200 EMA at around 134.83.