- USD/JPY weakened for the fourth consecutive session on Tuesday amid sustained USD selling.
- Weaker Japanese Q1 GDP report, a positive risk tone did little to lend any support to the pair.
- Bears might now aim to test the next relevant support near 108.55 area en-route monthly lows.
The USD/JPY pair dropped to four-day lows during the early European session, with bears now looking to extend the downward momentum further below the 109.00 mark.
The pair extended last week's retracement slide from the 109.75-80 area, or over one-month tops and edged lower for the fourth consecutive session on Tuesday. The US dollar remained depressed amid expectations that the Fed will keep rates low for a longer period. This, in turn, was seen as a key factor exerting pressure on the USD/JPY pair.
Friday's disappointing US Retail Sales report reaffirmed the Fed's dovish view and forced investors to scale back their bets over an earlier than anticipated lift-off. Hence, the focus will be on the release of the FOMC meeting minutes on Wednesday. In the meantime, a modest uptick in the US Treasury bond yields did little to impress the USD bulls.
Meanwhile, the downfall seemed unaffected by Tuesday's weaker Japanese Q1 GDP report, which showed that the economy contracted 1.3% during the January-March period and 5.1% YoY. Even a generally positive risk tone, which tends to undermine demand for the safe-haven JPY, failed to lend any support to the USD/JPY pair or stall the ongoing decline.
There isn't any major market-moving economic data due for release from the US on Tuesday, suggesting that the path of least resistance for the USD/JPY pair remains to the downside. Hence, a subsequent slide towards intermediate support near the 108.55 region, en-route monthly swing lows near the 108.35 region, now looks a distinct possibility.
