USD/JPY unable to recover amid USD weakness

The USD/JPY pair came in under renewed selling pressure during the first trading hours of the American session as the greenback continues to lose blood. Following a recovery attempt to 100.80, the pair once again slipped into the negative territory and is down 0.09% at 109.50 at the moment.

The US Dollar Index dropped below 100.50 for the first time since last Friday as the falling Treasury yields remain as a drag on the currency. As of writing, the U.S. 10-year bond yield is losing 1.3% on the day at 2.285%, and the DXY is down 0.14% at 100.49.

Additionally, the major equity indexes in the United States witnessed another weak opening on Tuesday with both the Dow Jones Industrial Average and S&P 500 losing around 0.3%. The risk aversion continues to weigh on stocks making safer assets like the JPY a better alternative.

Fed Dallas President Robert Kaplan crossed the wires earlier during the session but didn't offer anything new to the markets as he repeated that he expects to start trimming the balance sheet as soon as later this year and the inflation continues to rise towards the 2% target. There are no macro data left for the remainder of the day, and the market sentiment could be the only factor that can direct price movements. 

• Fed's Kaplan: US probably can't boost GDP growth anymore by increasing debt

Technical outlook

The initial hurdle for the pair aligns at 110 (psychological level) before 110.90/111.00 (20-DMA/psychological level) and 111.60 (Apr. 10 high). To the downside, a break below 109.35 (daily low) could aim for 109 (psychological level) and 108.55 (Nov. 17 low).

• USD/JPY room for a drop to 108.60 – UOB