As expected, USD/JPY is nearing the critical support level at 84.83 from last November (not shown on this chart), and is consolidating a bit after Finance Minister Yoshihiko Noda ramped up his concerns about the yen’s strength on the economy. Short term support lies at 85.31. The RSI at 36.6 suggest the pair is nearing oversold territory (technically defined as at or below 30).
The descending trend in USD/JPY is not only intact, but also strong today. We expect it is only a matter of time before the pair breaks to levels not seen since the mid 1990s (The next support after the 84.83 mark). In the shorter term, a weak ISM report could weigh further on the currency. Traders are also advised to watch the comments from the Japanese government. If anyone hints at FX interventions, the rebound in USD/JPY could be significant.