• A modest USD weakness fails to assist the pair to build on the overnight bounce.
• The ongoing slide in the US bond yields further collaborates towards capping gains.
The USD/JPY pair lacked any firm directional bias and was seen oscillating in a narrow trading band, below the 111.00 handle through the Asian session on Tuesday.
The pair's overnight attempted bounce from multi-week lows lost steam ahead of the 111.00 handle, with receding demand for traditional safe-havens also doing little to attract any fresh buying on Tuesday.
Despite the latest escalation in the US-China trade tensions, the fact that negotiations will continue this week undermined the Japanese Yen's relative safe-haven status and extended some support to the major.
It would now be interesting to see if the pair is able to gain traction or the current subdued/range-bound trading action turns out to be a consolidative phase before the next leg of near-term bearish trajectory.
There isn't any major market-moving economic data due for release on Tuesday and hence, the USD price dynamics/broader market risk sentiment might continue to be key determinants of the pair's momentum.
As Omkar Godbole, FXStreet's own Analyst and Editor writes: “The pair, therefore, looks set to test support at 109.70 (April 25 low) in the short-term. The bearish outlook would be neutralized if the pair closes above the descending 10-day MA, currently at 111.37. That, however, looks unlikely with signs of risk aversion.”
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