USD/JPY pulls away from daily lows as US stocks recover, stays near 108.20

• US Dollar Index stays in consolidation above 95.50.
• Wall Street's recovers modestly after starting the day sharply lower.

The USD/JPY started the week under pressure as the disappointing data from China on Monday caused concerns over a global economic slowdown to resurface while revealing the negative impact of the Trump administration's trade policy on the Chinese economy. After slumping to the 108 area, however, the pair staged a modest recovery and now looks to close the day near 108.20, where it's still down 0.33% on a daily basis.

Pressured by the dismal market mood, major equity indexes in the U.S. started the day sharply lower but retraced a large part of their early losses to allow the pair to stay in a consolidation phase near the 108.20 area. At the moment, the Dow Jones Industrial Average is losing 0.4% while the S&P 500 and the Nasdaq Composite are down 0.5% and 0.85%, respectively.

Meanwhile, amid a lack of macroeconomic data releases and fresh developments surrounding the government shutdown, the US Dollar Index extended its sideways course in its tight daily range, not providing any directional clues to the pair. The DXY was last seen losing 0.05% on the day at 95.60.

During the Asian trading hours on Tuesday, money supply and machine order tools data from Japan will be released, which are unlikely to receive a significant reaction from the markets. 

Key technical levels