The USD/JPY pair edged lower during the European session and dropped to near one-week lows, around the 106.40 region in the last hour. The pair witnessed some follow-through selling on the first day of the new week and extended the previous session's rejection slide from the 107.00 round-figure mark. The prevalent selling bias around the US dollar helped offset Monday's disappointing release of the Japanese GDP report and was seen as a key factor exerting pressure on the USD/JPY pair.

Government data released this Monday showed the world’s third-largest economy contracted by 27.8% annualized pace during the second quarter of 2020. This marked the biggest economic slump on record and was led by the coronavirus-induced lockdown, albeit failed to impress bullish traders or provided any meaningful lift to the USD/JPY pair.