USD/JPY hangs near 1-week lows, below mid-109.00s

   •  Unresolved US-China trade tensions continue to benefit JPY’s safe-haven status.
   •  Dovish Fed expectations keep the USD bulls on the defensive and weigh further.
   •  Traders still seemed reluctant to place aggressive bets ahead of the key risk events.

The USD/JPY pair dropped to over one-week lows during the Asian session on Tuesday, albeit has managed to rebound few pips thereafter.

The pair extended last week’s rejection slide from the key 110.00 psychological mark, with a combination of negative forces continuing to exert some downward pressure for the third consecutive session.

The Japanese Yen continues to benefit from increasing demand for perceived safe-haven assets, especially after the US Justice Department charged China's Huawei Technologies with fraud and obstruction. The latest development is now seen to complicate the upcoming high-level US-China trade talks and dented investors' risk appetite. 

Meanwhile, dovish Fed expectations kept the US Dollar bulls on the defensive and did little to influence the price action, though the downside remained limited near the 109.15 region. Traders seemed reluctant to place any aggressive bets and look forward to the highly anticipated two-day FOMC policy meeting starting today.

Moving ahead, the broader market risk sentiment might continue to act as one of the key determinants of the pair's momentum ahead of the Conference Board's US consumer confidence index, the only highlight from today's rather thin economic docket and due for release later during the early North-American session.

Technical levels to watch

Any subsequent slide below the 109.15 area now seems to accelerate the slide, possibly even below the 109.00 handle, towards its next support near the 108.70 region. On the flip side, any meaningful up-move now seems to confront some fresh supply near the 109.60-65 region, above which the pair is likely to make a fresh attempt to conquer the 110.00 handle.