Once the slave device running at 1.2V (left side in the schematic) tries to ACK, by driving ‘0’, this 0 does not propagate via TXS0108ERGYR to Master side running at 3.3V. Please see attached waveforms on both sides of the level. In 1.2 side PU is 30k (TXS0108ERGYR has 4k PU built-in), the 3.3V side has a few PU of ~3k.