FX traders, who have been buying USD/JPY all week according to EBS flow data, should watch out for a further drop in risk appetite.
That could see funds flow into the safe-haven yen, pushing USD/JPY lower and trapping those that bought the currency pair this week in the process.
Asian stocks have stepped back from record highs made on U.S. President Joseph Biden's stimulus proposal.
Sentiment was also hit by worries of new coronavirus restrictions in China, which reported 103 COVID-19 cases on Friday nL1N2JX0CV.
Those bullish on USD/JPY have been crippled by solid resistance above 104.00 in recent sessions.
Japanese exporter offers have helped to limited the upside.
USD/JPY's recent recovery moves have been stopped by the daily cloud, which currently spans 103.96-104.50 and the falling trend line from the March 24, 2020, 111.71 peak, which now comes in at 104.04.
If USD/JPY registers a daily close under the broken kijun line at 103.50, that should weaken the market structure and put those that have been buying USD/JPY this week into a bind.
For more click on FXBUZ