Market LookBeck II

(Reuters) - The U.S. dollar was nursing a grudge in early Asian trade on Tuesday after another attempt at 100 yen failed due to options-related offers, but traders suspect it is only a matter of time before the psychological level is broken.

The greenback bought 99.35 yen, little changed from late New York levels but down from Monday's high near 99.90. Traders said there is demand to buy dollar/yen on dips and a clear break above 100 will pave the way for a retest of the April 2009 high around 101.45.

The yen's downtrend remains firmly intact with Japan's radical monetary stimulus programme giving investors no incentive to hold the Japanese currency. The market will also be wary of buying the yen in the lead up to the Bank of Japan (BOJ) policy meeting on Friday.

"USD/JPY made another failed run at the 100.00 figure, but the BOJ interest rate decision on tap for later this week may spur a sharp selloff in the yen as the central bank takes a more aggressive approach in achieving the 2 percent target for inflation," said David Song, analyst at DailyFX.

"After expanding its bond purchasing program to 7 trillion yen earlier this month, the BOJ may stick to the sidelines this time around, but Governor Haruhiko Kuroda may broaden the scope of the non-standard measure to include a greater range of asset classes in an effort to encourage a stronger recovery."

The euro also retreated against the yen, slipping to 129.77 from Monday's high around 130.74. But it remained near a 3-year peak of 131.10 reached earlier this month.

Against the dollar, the common currency was at $1.3065 , still stuck in a $1.3000/3200 range for now. Keeping a lid on the euro were comments from European Central Bank policymakers that suggested the bank may be leaning towards a cut in interest rates.

Commodity currencies suffered a fresh setback overnight with the Australian dollar hitting a six-week low of $1.0236 , pulling further away from a high near $1.0600 set earlier in the month.

It was last at $1.0266, with immediate support at $1.0226, the 76.4 percent retracement level of its March to April rally.

The Aussie's fall came after data showed the pace of recovery in the U.S. housing market had slowed, adding to worries about the health of the global economy.

The market's next focus is HSBC's advance report on China's manufacturing activity for April due at 0145 GMT. Investors are keen to see how the second quarter is shaping up after first quarter economic growth numbers disappointed markets.