USD/JPY slides back closer to over one-month lows, below 111.00 handle

The USD/JPY pair ran through some fresh offers near 111.30-35 region and dropped back below the 111.00 handle during early European session on Tuesday.

The pair stalled overnight tepid recovery move from over one-month lows and turned lower for the sixth consecutive session amid persistent greenback selling bias. The sentiment around the US Dollar has turned highly bearish in wake of growing skepticism over the US President Donald Trump's ability to deliver on his promised fiscal stimulus reforms and doubts over the possibility of another Fed rate hike acting in 2017. In fact, the key US Dollar Index has now dropped to fresh 13-month lows and has been one of the factors weighing on the major.

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The Japanese Yen also benefitted from the latest BOJ monetary policy meeting minutes, showing that policymakers contested how much information to disclose about a possible exit from quantitative easing. Moreover, the prevalent cautious sentiment, as depicted by subdued action around riskier assets - like equities, was also seen lending support to traditional safe-haven assets and further collaborated to the pair's drop back below the 111.00 handle.

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Later during the NA session, the release of Conference Board's Consumer Confidence Index from the US would now be looked upon for some fresh trading impetus. The key focus, however, would remain on the outcome of two-day FOMC meeting, due to be announced during the NY trading session on Wednesday and prove to be the next catalyst determining the pair's near-term trajectory.

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet writes: "A bullish price action today would add credence to Monday’s long legged doji candle and could yield an upside break of the falling channel, in which case the resistance around 112.32-112.50 could be put to test."

"On the downside, only an end of the day close below 110.98 (61.8% Fib R+ Gann fan 4x1 line) would mark the continuation of the sell-off from the recent high  of 114.49. The spot could then test bids around 110.00 levels" he added.