The USD/JPY pair has been experiencing a significant downtrend, marking its fifth consecutive day of decline. The pair has reached a nearly one-month low during the early European session, pausing near the 38.2% Fibonacci retracement level of the March-June rally. The bearish pressure surrounding the USD remains unabated due to speculations that the Federal Reserve (Fed) will end its rate-hiking cycle following a 25 bps liftoff in July.

On the other hand, the Japanese Yen (JPY) is drawing support from expectations that the Bank of Japan (BoJ) will adjust its ultra-loose policy settings as soon as this month. This has contributed to the USD/JPY pair’s downfall over the past week. However, a generally positive tone around the equity markets is undermining demand for the safe-haven JPY and lending some support to spot prices.

Traders are also seen waiting on the sidelines ahead of the US consumer inflation figures due for release later during the early North American session. The crucial US CPI report should influence the USD and provide some meaningful impetus to the USD/JPY pair. In the meantime, the extremely oversold Relative Strength Index (RSI) on hourly charts is seen helping limit the downside, at least for the time being.

Technical analysis suggests that the path of least resistance for the USD/JPY pair is to the downside. However, bears might still wait for some intraday consolidation or a modest bounce before placing fresh bets from current levels. The 38.2% Fibo level could protect the immediate downside ahead of the 139.00 mark, which if broken will be seen as a fresh trigger for bearish traders. The pair might then accelerate the depreciating move towards testing sub-138.00 levels, representing the 61.8% Fibo level.