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USD / JPY struggles near multi-week lows around 113.00 level

  • USD / JPY moved lower for the fourth day in a row Tuesday amid sustained selling around the USD.
  • Cautious market sentiment supports the safe-haven JPY and also contributes to the pair’s slide.
  • Acceptance below the round level of 113.00 could set the stage for further losses.

The pair USD/JPY moves lower during the European session on Tuesday and briefly falls towards the 112.80 region, just a few pips above the four-week lows set at 112.72 during today’s Asian session. At time of writing, the pair is recovering slightly to the 113.00 region, still losing -0.15% on the day.

A combination of factors dragged the USD / JPY pair lower for the fourth day in a row and reaffirmed the previous day’s bearish break below the strong horizontal support at 113.30-25. The Cautious market sentiment supported the safe-haven Japanese yen and put some pressure on the pair amid the selling bias around the US dollar.

In fact, the USD prolonged its recent pullback from annual highs touched in reaction to Friday’s upbeat NFP report and has seen pressured by pessimistic outlook from the Fed. It is worth remembering that the US central bank stuck to its transitory inflation narrative and indicated that I was in no rush to increase borrowing costs.

Apart of this, a further decline in US Treasury yields weighed further on the USD and contributed to the decline in the USD / JPY pair to the lowest level since October 11. The drop could also be attributed to technical selling below the 113.00 level, which could have already laid the foundation for further losses.

Having said that, a bit of oversold on the RSI on the 1 hour chart prevented investors from opening new bearish positions and it helped limit the pair’s losses. Investors now await the release of the US IPP Producer Price Index. This, along with comments from Fed Chairman Jerome Powell in a speech scheduled for today will influence the USD and provide some boost to the USD / JPY pair.

USD / JPY technical levels

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