USD/JPY slips below 109.00 handle, fresh session lows

• Scepticism on US-China tariffs deal seemed to weigh on investors’ sentiment.
• Reviving safe-haven demand benefitted the JPY and exerted some pressure.
• The downside is likely to remain limited ahead of this week’s key US macro data.

The USD/JPY pair dropped to fresh session lows in the last hour, with bears now looking to extend the slide further below the 109.00 round-figure mark.
 
The pair witnessed some follow-through selling for the second consecutive session on Monday and retreated farther from over five-month tops set late last week. A slight deterioration in the global risk sentiment, as depicted by weakness around equity markets, underpinned the Japanese Yen's safe-haven demand and exerted some downward pressure on the major.

Weighed down by fading trade-optimism

Given last week's report suggested that the subject of rolling back tariffs faced fierce internal opposition in the White House, the fact that the US President Donald Trump also denied any such decision, though did not completely rule out a deal, fueled some scepticism and was seen weighing on investors' appetite for perceived riskier assets.
 
Meanwhile, the US Dollar stood tall near multi-week tops, supported by the recent upsurge in the US Treasury bond yields, but did little to lend any support or stall the pair's intraday slide back below the 109.00 handle. However, absent relevant market-moving economic releases might help limit any further downside, at least for the time being.
 
Moving ahead, this week's other US economic releases, including the latest consumer inflation figures and monthly retail sales data, along with the Fed Chair Jerome Powell's testimony will now play a key role in determining the pair's next leg of a directional move.

Technical levels to watch