USD/JPY struggles near multi-week lows, below 113.00 mark

The USD/JPY pair maintained its offered tone through the mid-European session and was seen trading around the 112.90-85 region, just a few pips above four-week lows touched earlier this Tuesday.

A combination of factors dragged the USD/JPY pair lower for the fourth successive day and reaffirmed the overnight bearish break below the 113.30-25 strong horizontal support. The cautious market mood underpinned the safe-haven Japanese yen and exerted some pressure on the major amid the prevalent US dollar selling bias.

In fact, the greenback prolonged its recent pullback from YTD tops touched in reaction to the upbeat NFP report on Friday and was pressured by the Fed's dovish outlook. It is worth recalling that the US central bank stuck to its transitory inflation narrative and indicated that it was in no rush to raise borrowing costs.

Apart from this, a fresh leg down in the US Treasury bond yields further weighed on the greenback and contributed to the USD/JPY pair's decline to the lowest level since October 11. The downfall could also be attributed to technical selling below the 113.00 mark, which might have already set the stage for further losses.

That said, slightly oversold RSI on hourly charts held back traders from placing fresh bearish bets and helped limit losses. Traders now look forward to the release of the US Producer Price Index (PPI). This, along with Fed Chair Jerome Powell's remarks will influence the USD and provide some impetus to the USD/JPY pair.

Technical levels to watch