• USD/JPY eyes a break below 104.50 as the US dollar retreats. 
• The spot on the verge of a rising wedge breakdown on the hourly chart.
• RSI points south while within the bearish territory.

Having failed to close Monday above the critical barrier at 104.95, USD/JPY drops back in the red zone in Tuesday’s Asian hours, taking cues from a broad retreat in the US dollar.

The risk sentiment is stabilizing in Asia, reflective of the bounce in the US stock futures, following the COVID-19 fears induced sell-off on Wall Street.

From a short-term technical perspective, the spot looks south while on the verge of confirming a rising wedge breakdown on the hourly chart.

The bears need a firm break below 104.75 to extend their control and validate the bearish formation. Subsequently, a test of the pattern target measured at 104.00 remains on the cards.

Ahead of that level, Wednesday’s low of 104.34 could test the bears’ commitment. The hourly Relative Strength Index (RSI) points south, currently at 39.84, allowing room for more declines.

Any pullback could face strong offers at 104.80, the confluence of the 100 and 50- hourly moving averages (HMA).

Acceptance above the latter would call for a test of the 21-HMA at 104.87. All in all, the path of least resistance appears to the downside.

USD/JPY: HOURLY CHART

USD/JPY: Additional levels