USD/JPY did not pullback far enough for us to get long for the on-going retest of 120.70 highs. So far, the sellers have come out on top as London is going home for the night. The move up from the equivalent downside EUR/USD support level has been rather pathetic in terms of price dynamics, which indicates a retest of the lows could in play. And with the possible USD/JPY 120.70 failure, this could spell disaster for the cross. Even if USD/JPY merely consolidates below 120.70, and EUR/USD moves down towards the 1.2900 handle, EUR/JPY will all but certainly violate trendline support. The retracement from 152.67 consisting of a variety of 3-wave advances has correction painted all over it. However, price action was less than desirable in the volume markets this morning, so I would wait until tonight before putting anything on.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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