The Japanese Yen (JPY) continues to struggle to attract meaningful buyers and held near a three-week low against its US counterpart heading into the European session on Tuesday. Firming expectations that the Bank of Japan (BOJ) will keep short-term interest rates unchanged later this week, coupled with a positive risk tone, continued to undermine the JPY's safe-haven appeal. Moreover, bets for a less dovish Federal Reserve (Fed) continued to support a pickup in the US Treasury bond yields, which turned out to be another factor weighing on the lower-yielding JPY.

However, JPY market players seemed reluctant to place any aggressive bets and preferred to stay away ahead of the key central bank event risks. The Fed is scheduled to announce its policy decision on Wednesday, followed by the BOJ on Thursday. Meanwhile, a bullish US Dollar (USD) will act as a tailwind for the USD/JPY pair. Traders now eye US Retail Sales for near-term impetus. That said, the fundamental backdrop suggests that the path of least resistance for the JPY is to the downside and supports prospects for additional gains for the pair.

Source: FXStreet