- USD / JPY weakened for the fourth day in a row Tuesday amid a sustained sell off around the USD.
- The weaker first quarter Japanese GDP report and positive risk sentiment do little to support the pair.
- The bears could aim to test the next relevant support near 108.55 en route to monthly lows.
The pair USD / JPY has fallen to fresh four-day lows during the European session on Tuesday, with the bears now looking to extend the bearish momentum below the 109.00 level. At the time of writing, the pair remains in the zone of daily lows around the 108.90 level.
The pair has extended last week’s retracement slide, from the 109.75-80 area at month-long highs, and moved lower for the fourth day in a row on Tuesday. The US dollar has been under pressure amid expectations that the Fed will keep rates low for a longer period. This, in turn, has been seen as a key factor putting pressure on the USD / JPY pair.
The disappointing US retail sales report on Friday has reaffirmed the pessimistic view of the Fed and it has forced investors to lower their expectations of a tightening of the Fed’s monetary policy ahead of schedule. Therefore, the focus will be on the release of the minutes of the FOMC meeting on Wednesday. Meanwhile, a modest rally in US Treasury yields has done little to impress USD bulls.
In the meantime, the decline did not appear to be affected by Tuesday’s weaker first quarter Japanese GDP report, which has shown that the economy contracted 1.3% during the January-March period and 5.1% year-on-year. Even a positive risk sentiment, which tends to weigh on demand for the safe-haven JPY, has not lent any support to the USD / JPY pair or to stop the current slide.
There is no major economic data release from the US on Tuesday, suggesting that the path of least resistance for USD / JPY remains to the downside. Therefore, a further decline towards the intermediate support near the 108.55 region, en route to the monthly lows near the 108.35 region, now seems like a clear possibility.
USD / JPY technical levels
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