USD/JPY off lows, still in the red below 110.00 mark

• USD/JPY extended the previous session’s rejection from 110.00 round-figure mark.
• Reviving safe-haven demand benefitted the JPY and exerted some fresh pressure.
• The downside remains limited and thus, warrants some caution for bearish traders.

The USD/JPY pair edged lower on Tuesday and dropped to three-day lows during the Asian session, albeit has managed to recover few pips thereafter.

Following the previous session's failed attempt to reclaim the key 110.00 psychological mark, the pair came under some fresh selling pressure on Tuesday amid a turnaround in the global risk sentiment.

USD/JPY weighed by reviving safe-haven demand

Worries over the economic impact of the deadly coronavirus outbreak resurfaced on Tuesday after Apple warned that it will be unable to meet its March quarter guidance due to iPhone production issues.

The warning from the most valuable company in the US dampened the recent optimism led by the PBoC’s stimulus measures and provided a modest boost to the Japanese yen's safe-haven status.

The global flight to safety was further reinforced by sliding US Treasury bond yields, which kept the US dollar bulls on the defensive and further collaborated to the pair's intraday slide to the 109.65 region.

Despite the pullback, the pair managed to find some support at lower levels and remained confined in a familiar trading range as investors preferred to wait for a fresh catalyst before placing directional bets.

Hence, it will be prudent to wait for some strong follow-through selling, possibly below a strong horizontal support near mid-109.00s, before positioning for any further near-term depreciating move.

Technical levels to watch