USD/JPY tumbles to lows, closer to 109.00 mark

The USD/JPY pair remained heavily offered through early NA session and dropped to fresh session lows, near 109.15 level in the past hour.

Escalating geopolitical tensions, on signs of more nuclear missile tests by North Korea continued driving flows towards traditional safe-haven currencies, including the Japanese Yen, and was seen weighing on the major. 

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Meanwhile, a sharp pull-back in the US Treasury bond yields, largely negated some positive cues from the prevalent bullish sentiment around European equity markets, did little to provide any respite for the US Dollar bulls. 

Even the latest comments by the Fed Governor Lael Brainard, showing readiness to start shrinking balance sheet but simultaneously sounding cautious on additional rate hike moves failed to inspire the bulls and stall the pair's slide back closer to the 109.00 handle. 

Next on tap would be the US factory orders data followed by speeches by Minneapolis Fed President Neel Kashkari (later during NY session) and Dallas Fed President Robert Kaplan (early Asian session on Wednesday).

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet notes: "An upside break of the falling wedge would open doors for falling channel resistance currently seen around 110.20 levels. A move above 110.20 would not only confirm a bullish flag breakout, but shall also confirm a break of the rising trend line [from the April low and June low]. Thus, the pair could then proceed to test the upward sloping weekly 50-MA level of 111.18."

"On the downside, only an end of the day close below 109.00 would revive the sell-off from the high of 114.49" he added.