USD / JPY continues to trade in negative territory around 109.00

• USD / JPY is falling for the fourth day in a row on Tuesday.
• The yield on 10-year US Treasuries is down nearly 1%.
• The general weakness of the USD does not allow the USD / JPY to recover.

The pair USD/JPY It hit its lowest level in nearly a week at 108.86 on Tuesday and appears to be struggling to organize a convincing recovery. At time of writing, the pair was down 0.22% on the day at 108.95.

Falling US Treasury Yields Hurts the USD

Earlier in the week, the pair struggled to make a decisive move in either direction as the risk averse market environment helped the yen to remain resilient against the dollar. On the other hand, an increase of more than 1% observed in the yield of the US Treasury bonds to 10 years of reference allowed the pair to limit its losses.

With the 10-year US Treasury yield shedding 0.8% ahead of Tuesday’s US session, the dollar struggles to find demand and keeps USD / JPY on the defensive. Reflecting the widespread weakness of the USD, the US Dollar Index is shedding 0.44% on the day at 89.80.

Later in the session, April’s housing starts and building permits will be included on the US economic agenda hours earlier, data from Japan showed that the annualized Gross Domestic Product (GDP) contracted by 5.1% after growing 11.6% in the last quarter of 2020. This reading was worse than the market’s expectation of a 4.6% contraction. but it failed to trigger a significant market reaction.

Meanwhile, S&P 500 futures are trading in positive territory, suggesting that risk flows could continue to dominate financial markets in the second half of the day and force USD / JPY to continue fluctuating in its daily range.

Technical levels