FXStreet (Mumbai) - A renewed selling wave hit the US dollar in early trades, now pushing USD/JPY towards 121 barrier, as risk-on sentiment appears to be fading with markets now awaiting fresh incentives from the European open. USD/JPY drops below hourly 20-SMA at 121.18 Currently, the USD/JPY pair trades -0.35% lower at 121.06, bouncing-off fresh session lows at 121 levels. The offered tone in the UD/JPY pair keeps growing bigger as we progress towards the European opening bells as markets continue to book profits on their USD longs after the recent upsurge led by dovish ECB and China easing news. The major extends its corrective slide this session as the yen regains control on the back of waning risk-appetite while the Asian indices are seen paring gains. Markets also remain cautious ahead of the European open and continue to favour the yen against the greenback. Later this week, the focus remains on the key FOMC decision and the BOJ monetary policy statement. While in the day ahead, new home sales data from the US in the day ahead will be eyed amid a data-deficient US macro-calendar. USD/JPY Technical levels to consider The pair is heading for a retest of 121.43/50 (200-DMA + Friday’s High), above which the pair would climb further towards 121.70/73 (100-DMA + Aug 28 High). While to the downside immediate support might be located at 121 (Today’s Low + round number), below which 120.89 (5-DMA) would be tested. For more information, read our latest forex news.