USD/JPY: a correction taking place, turning bearish?

USD/JPY remains on the 103 handle despite some price pressures with the poor show in US ISM data today.

USD/JPY has been on the rampage after last week's Jackson Hole and accompanying hawkish rhetoric from Fed speakers over the last months, especially as we move closer to this month's FOMC with Fischer , the Fed's no.2, suggesting that Yellen was implying that September was a 'possible' month for a rate hike, albeit not committing to it.

Fed still reluctant to explicitly signal September rate hike - BTMU

However, The Institute of Supply Management (ISM) manufacturing activity index dropped to 49.9 in August from 52.6 in July and this ahead of the nonfarm payrolls was a sell-off trigger for the greenback given a reading below the 50 threshold indicates that factory activity is contracting. Expectations were for reading of 52.0.

Also, analysts at The Bank of Tokyo-Mitsubishi UFJ, explained that the US dollar’s upturn may weaken stock market sentiment and support a USD/JPY reversal. "Japanese investors are waiting for the BoJ’s comprehensive assessment in September. They might not actively boost investment ahead of the September BoJ Monetary Policy Meeting.”

USD/JPY levels

With spot trading at 103.21, we can see next resistance ahead at 103.25 (Weekly Classic R2), 103.27 (Daily Classic PP), 103.27 (Hourly 20 EMA), 103.42 (Monthly High) and 103.42 (Weekly High). Support below can be found at 103.16 (Daily Low), 103.00 (Daily Classic S1), 102.85 (Yesterday's Low), 102.58 (Daily Classic S2) and 102.54 (Weekly Classic R1). Looking to candlestick patterns, we can see a Dark Cloud Cover formation on the 4-hour chart.