USD/JPY Setup: Awaiting Pullback to Fibonacci Support Before Eyeing Rebound

After rallying more than 3.5% in June to multi-month highs above the psychological 145.00 mark, the U.S. dollar has softened against the Japanese yen over the past few days, with the exchange rate down around 1.5% in the first week of July. This slump, however, may be part of a temporary correction, as the fundamental and technical outlook for the greenback remains constructive. When an asset becomes overbought and its price rises too quickly, as has happened recently with USD/JPY, it is normal for pullbacks to occur, as traders who have taken long positions and have been partly responsible for the upward move begin to take profits. This may be taking place right now, meaning there is no reason to believe that a new trend is developing. With USD/JPY still firmly biased to the upside, weakness could fade soon. The daily chart shows that after Friday's sell-off, prices are approaching an important support zone near 140.92, corresponding to the 23.6% Fibonacci retracement of the January 2023/June 2023 advance. The pair could establish a base around these levels before turning higher and resuming its ascent.