• USD/JPY witnessed some selling for the third consecutive session on Tuesday.
  • Retreating US bond yields weighed on the USD and exerted downward pressure.
  • The underlying bullish sentiment did little to lend any support or stall the decline.

The USD/JPY pair continued with its struggle to find acceptance above the very important 200-day SMA and witnessed some selling during the second half of the trading action on Monday. The retracement slide extended through the Asian session on Tuesday and dragged the pair to one-week lows, below the key 105.00 psychological mark. The downfall marked the third consecutive day of a negative move and was exclusively sponsored by the emergence of fresh selling around the US dollar.

Friday's rather unimpressive US jobs report raised doubts about a relatively faster US economic recovery from COVID-19 and sustainability of the recent USD rally. This, along with a turnaround in the US Treasury bond yields, exerted some downward pressure on the greenback. It is worth recalling that the yield on the benchmark 10-year government bond shot to the highest level since March 2020 amid developments to fast-track the US President Joe Biden's proposed $1.9 trillion stimulus package.

With the latest leg down, the pair has now reversed nearly 100 pips from the 105.75 region – touched at the end of the previous week for the first time since October 2020. Bulls largely shrugged off the underlying bullish sentiment in the financial markets, which tends to undermine demand for the safe-haven Japanese yen. The global risk sentiment remained well supported by progress in coronavirus vaccinations, which has been fueling hopes for a strong global economic recovery.

There isn't any major market-moving economic data due for release on Tuesday from the US. Hence, the US bond yields will play a key role in influencing the USD price dynamics. Apart from this, the broader market risk sentiment will also be looked upon to grab some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, repeated failures near a technically significant moving average could be the first sign of bullish exhaustion. That said, any subsequent pullback is likely to find decent support near a multi-month-old descending trend-line resistance breakpoint. The mentioned resistance-turned-support is pegged near the 104.45 region, which should act as a key pivotal point for short-term traders.

A sustained breakthrough might prompt some technical selling and turn the pair vulnerable to weaken further below the 104.00 mark, towards testing the next major support near the 103.55-50 region. On the flip side, the daily swing highs, around the 105.25 zone, now seems to act as an immediate resistance ahead of the 105.55 supply zone. Bulls might wait for some strong follow-through buying beyond the mentioned hurdle before positioning for any further near-term appreciating move.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD stays under bearish pressure, closes in on 1.0500

EUR/USD stays under bearish pressure, closes in on 1.0500

EUR/USD has extended its daily slide in the American session and declined below 1.0530. The one-year inflation expectations of the Conference Board's Consumer Confidence Survey climbed to 8% in June from 7.5% in May, providing a boost to the greenback. 


GBP/USD continues to push lower toward 1.2200

GBP/USD continues to push lower toward 1.2200

GBP/USD has turned south in the American session and slid toward 1.2200. The US Dollar Index extended its daily rally toward 104.50 after the latest US data on Tuesday, forcing the pair to stay under bearish pressure. 


Gold continues to fluctuate in tight range above $1,820

Gold continues to fluctuate in tight range above $1,820

Gold is having a difficult time making a decisive move in either direction on Tuesday and fluctuating in a narrow range above $1,820. As investors assess the latest data releases from the US, the 10-year US T-bond yield clings to modest gains above 3.2%.

Gold News

Former Ripple CTO is dumping millions of XRP, traders beware

Former Ripple CTO is dumping millions of XRP, traders beware

XRP price shows promise that it is ready to trigger a massive run-up as the first half of the year comes to an end. There are three reasons why investors should be bullish on Ripple.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!