USD/JPY trades with modest weakness, but hold above 113.00 handle

   •  Cautious mood underpins JPY’s safe-haven demand and exerts some pressure.
   •  Subdued USD price action fails to assist the pair to build on the overnight upsurge.
   •  A mildly positive US bond yields likely to help limit any meaningful downfall. 

The USD/JPY pair traded with a mild negative bias through the Asian session on Tuesday and eroded a part of the previous session's strong upsurge to near one-week tops.

A goodish pickup in the US Dollar demand, boosted by the latest Brexit drama-led selling in the British Pound, assisted the pair to stage a solid rebound from the very important 100-day SMA support on Monday.

The pair rallied over 110-pips from closer to over one-month lows set last Thursday and surged back above the 113.00 handle but lacked any strong follow-through on Tuesday amid the prevalent cautious mood.

Concerns over the US-China tension, following the recent arrest of a top Chinese executive, continued weighing on market sentiment and provided a minor lift to the Japanese Yen's safe-haven status. 

Meanwhile, the latest optimism, led by reports that the world's two largest economies discussed the roadmap for the next stage of their trade talks, helped limit any deeper retracement slide, at least for the time being.

This coupled with a modest uptick in the US Treasury bond yields exerted some additional support and might further collaborate towards protecting the immediate downside. 

Moving ahead, today's US economic docket, highlighting the release of Nov. PPI figures, will now be looked upon for some fresh impetus later during the early North-American session.

Technical levels to watch

The 113.00 handle might continue to protect the immediate downside, below which the pair is likely to drift back towards testing the 112.70-65 horizontal support. On the flip side, the 113.35 region now seems to have emerged as an immediate hurdle, which if cleared might assist the pair to surpass the 113.75-80 intermediate supply zone and aim towards reclaiming the 114.00 handle.