FxWirePro: USD/JPY holds gains above 109 handle, dollar finds bids as markets turn cautious

USD/JPY chart - Trading View 

USD/JPY was trading 0.25% higher on the day at 109.32 at around 06:20 GMT, after closing 0.22% lower in the previous session.

The U.S. dollar attracted safe haven bids early on Tuesday as markets remained cautious after Powell poured cold water on U.S. recovery hopes.

Fed Chair Jerome Powell said the recovery is patchy and supply problems seem to slow US growth. John Williams added that the US economy has a long way to go. 

Echoing policymakers' remarks, the US ISM Manufacturing Purchasing Managers' Index disappointed with 60.7 points. Comments showed that companies are struggling with higher prices and supply chain issues. 

Ongoing trade/geopolitical tensions between the West and China, as well as Russia, also weigh on the sentiment.

On the positive side, optimism rose over anticipated FDA approval to the Pfizer-BioNTech covid vaccine for the age-group of 12-15 years age group.

Covid updates and US Factory Orders for March will be important to watch for near-term direction. US Factory Orders are expected at +1.3% versus -0.8% prior. 

Support levels - 109.04 (5-DMA), 108.90 (200W MA), 108.82 (21-EMA)

Resistance levels - 109.93 (Upper BB), 110, 110.84 (April high)

Summary: Technical studies show potential for upside. Retrace has bounced off cloud support and price action has broken above 21-EMA.

GMMA indicator shows major trend has remained bullish, while minor trend has turned bullish. The pair has ignored an inverted hammer on Monday's trade and is set to resume upside.