USD/JPY turns negative on the day below 109.70 amid ongoing USD selloff

• USD/JPY reversed its direction after rising above 110.00 on Monday.
• US Dollar Index fell below 93.00 during American trading hours.
• Risk-positive market environment is limiting USD/JPY's downside.

After rising to a daily high of 110.15, the USD/JPY pair lost its traction during the American trading hours and turned negative on the day. As of writing, the pair was down 0.1% on the day at 109.69.

USD selloff picks up steam

Earlier in the day, the JPY struggled to find demand as a safe haven with risk flows dominating the financial markets. However, the selling pressure surrounding the greenback made it difficult for the pair to preserve its bullish momentum in the second half of the day.

Reflecting the broad-based USD weakness, the US Dollar Index is down 0.53% at 92.96. Meanwhile, the S&P 500 Index is trading at a new all-time high of 4,486, rising more than 1% on a daily basis. Nevertheless, the upbeat market mood is keeping JPY's gains limited for the time being. 

The data published by IHS Markit revealed on Monday that the growth momentum in both the manufacturing and service sectors softened in August with the Manufacturing PMI and Services PMI retreating from July levels. Other data from the US showed that Existing Home Sales increased by 2%, surpassing the market expectation of 1.3%.

There won't be any high-tier data releases featured in the Japanese economic docket on Tuesday and the risk perception is likely to remain the primary market theme.

Technical levels to watch for