The USD/JPY pair has finally broken down of the bearish consolidation phase held through European trading session and tumbled to fresh monthly lows near 112.20-15 region.
A fresh wave of greenback selling pressure on Tuesday, with the key US Dollar Index sinking to 7-week lows near mid-99.00s, has been a key factor weighing on the major for sixth consecutive session. The post-FOMC slide in the US treasury bond yields has failed to lend any support to the broad based greenback sell-off.
Adding to this, a sharp reversal in trading sentiment around the US equity markets further boosted the Japanese Yen's safe-haven demand and collaborated to the pair's downslide to the lowest level since Feb. 28.
Meanwhile, the release of better-than-expected US current account deficit for the fourth quarter of 2016 did little to provide any immediate respite for the bulls as market seemed convinced that the Fed is unlikely to adopt a faster rate-tightening cycle. Hence, investors on Tuesday will remain focused on speeches by Kansas City Fed's Esther George and Cleveland Fed's Loretta Mester.
Valeria Bednarik, Chief Analyst at FXStreet writes, "according to the 1 hour chart, as technical indicators are flat around their mid-lines, but the 100 SMA has accelerated its slide well above the current level, offering a strong dynamic resistance in the case of a recovery at 113.10. In the 4 hours chart, the price remains far below horizontal moving averages, whilst technical indicators have turned higher within range, but still below their mid-lines, also favoring a new leg lower. At this point, a break below 112.00 is required to confirm a steeper decline, which will likely extend pass 111.60, in where the pair bottomed multiple times during the last two-months."