USD/JPY dipped to 112.98 as the 10-yr T-yield fell below 2.4%

The USD/JPY pair extended the overnight sell-off to a one-week low of 112.98 as the 10-year treasury yield fell below the former resistance-turned-support level of 2.4 percent.

A key trend line support breached

The support offered by the trend line sloping upwards from the Sep. 8 low and Oct. 16 low was breached on Monday. The bid tone around the USD weakened as the 10-year treasury yield fell below 2.4 percent and extended losses to 2.361 percent.

The decline in the treasury yield could be due to political uncertainty in the US. The special investigation into Russian election meddling closed in on Donald Trump on Monday as the former foreign policy adviser pleaded guilty of contacts with Kremlin and charges of money laundering were slapped on another aide.

Focus on BOJ

The Bank of Japan (BOJ) is likely to maintain the status and quo and may revise inflation forecasts lower. The Japanese Yen may come under pressure if the central bank stresses the need to keep the policy ultra accomodative ahead of the planned sales tax hike in 2017.

USD/JPY Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "the short-term picture for the pair is now bearish, as in the 4 hours chart, technical indicators present strong bearish slopes within negative territory, with no signs of changing course, while the price neared the 100 SMA, the immediate support around 112.90, for the first time in over a week.  Below the level, the negative momentum will likely accelerate, with scope then to test 111.60 on disappointing US data later in the week."