USD/JPY hangs near multi-month lows, just below 108.00 handle

   •  Fed rate cut expectations continue to weigh on the greenback. 
   •  A goodish bounce in the US bond yields helped limit the downside.
   •  Investors now eye Powell’s scheduled speech for fresh impetus.

The USD/JPY pair maintained its softer tone through the early European session on Tuesday and is currently placed at five-month lows, below the 108.00 handle.

The safe-haven Japanese Yen remained supported by the recent escalation in trade tensions and growing fears of a sharp economic slowdown. This coupled with a broad-based US Dollar weakness - amid increasing bets of a possible rate by the Fed, kept exerting some downward pressure on the major.

Monday's disappointing release of the ISM manufacturing PMI, which fell to its lowest level since October 2016, followed by St. Louis Fed President James Bullard's comments that a rate cut may be warranted soon reinforced market expectations that the Fed might be forced to cut interest rates by the end of this year. 

The USD bearish pressure remained unabated despite a goodish bounce in the US Treasury bond yields, though some initial signs of stability in the global financial markets helped limit further downside ahead of the Fed Chair Jerome Powell scheduled speech later during the early North-American session.

Technical levels to watch