USD/JPY extends fall today in drop back below 158, what's next?

It's an eventful start to the day in the major currencies space, with USD/JPY once again drawing all the attention. The currency pair fell by nearly 1% in overnight trading, with a wave of selling hitting right before the US open in particular.So, what is happening that is causing the fall in USD/JPY here?As mentioned early yesterday, the push above the 160.00 level is a dangerous game for USD/JPY. It's all a psychological play at the moment and any attempts to run too far, too fast to the upside may invite intervention risks from either Tokyo and/or Washington.So, that is one consideration. And as mentioned as well, we could be seeing rate checks from Tokyo to at least give fair warning to traders perhaps. That sort of signal may be what is amplifying the moves as we get into the new day as well.Besides that, markets are at least also growing more convinced about a BOJ rate hike for September and we are also seeing bond yields pull back a little from the highs. So, that at least alleviates some of the pressure off the yen currency and also keeps the dollar run up in check for now.So, what's next for USD/JPY?The pair is now falling back below the 158.00 mark to 157.60 levels on the day, down by 0.7%. Looking at the big picture chart:The fall now not only eliminates support from the 200-day moving average (blue line), but also threatens to take out the lows from 19-20 August near the 158.00 region itself.This puts sellers back in technical control of the currency pair. And that definitely opens up some scope to travel to the downside with further daily support only seen closer to 157.00 next.For now, traders seem to be heeding the warning of another potential intervention strike. But to chase a material break lower, it may be a bit tough.Firstly, traders have already fully priced in a rate hike for the BOJ this month. Secondly, it will require a big downside surprise from the US jobs report tomorrow to really trigger a material turnaround in the bond market. And even then, the latter is not guaranteed to last.So as long as the bond market continues to feel the burn and yields stay elevated, that will keep the pressure on the yen. That so long as the US-Iran conflict also continues to keep as it is.In short, the drop today puts downside risks back in focus for USD/JPY as it takes out key technical support levels. However, there is still some hurdles to get through in order to sustain such momentum. The biggest one is getting the bond market to play ball. That being said, it is clear that any major upside momentum is also very limited now by intervention risks - especially closer to 160. This article was written by Justin Low at investinglive.com.