USD/JPY holds steady above 109.00 handle, lacks follow-through

• USD/JPY regains some traction and recovers a part of the overnight slide.
• A modest USD uptick, stability in financial markets extended some support.
• The uptick is likely to remain capped amid persistent trade uncertainties.

The USD/JPY pair regained some positive traction on Tuesday and recovered a part of the previous session's sharp intraday slide to near one-week lows.

A combination of factors failed to assist the pair in building its early uptick on Monday, rather prompted some aggressive selling and led to a dramatic intraday turnaround of around 80 pips from a six-month high level of 109.73.

Focus remains on trade developments

The US President Donald Trump's decision to re-impose tariffs on steel and aluminium from Brazil and Argentina weighed on the global risk sentiment and provided a goodish lift to the Japanese yen's perceived safe-haven status.

This coupled with some renewed US dollar selling bias, aggravated by the disappointing release of the US ISM Manufacturing PMI, exerted some additional downward pressure and further contributed to the overnight downfall.

The pair slipped back below the 109.00 handle, though the bearish pressure eased a bit near the very important 200-day SMA, with a modest USD rebound and signs of stability in the global risk sentiment lending some support.

It, however, remains to be seen if the pair is able to capitalize on the attempted positive move or meets with some fresh supply at higher levels amid absent relevant market-moving economic releases and persistent trade uncertainty.

Technical levels to watch