USD/JPY looks for firm direction above 107.00 amid bank holiday in Japan

  • USD/JPY seesaws in a choppy range between 107.13 and 107.20 following its U-turn from 107.28.
  • Fresh headlines concerning the Sino-American tension triggers risk-reset, uncertainty surrounding the US fiscal plan adds to worries.
  • Qualitative catalysts will keep the driver’s seat amid a lack of major data/events.

USD/JPY eases to 107.16 amid the initial hours of the Asian trading session on Thursday. The pair flashed a positive daily closing, with a high of 107.28, during the previous day but failed to keep the upside momentum afterward. This joined the off in Japan while portraying sideways moves between 107.13 and 107.20.

The risk barometer’s gains on Wednesday could be traced to the fresh US-China tension after the Trump administration ordered Beijing to empty the consulate office in Houston. The same got anticipated retaliation from the dragon nation to push the American diplomats to close the office in Wuhan. Recently, US President Donald Trump cited readiness to use additional measures against the Asian major while news from Axios suggests an escalation in the tussle citing Federal Bureau of Investigation (FBI).

Also weighing on the risk-tone could be the recent uncertainty surrounding the American fiscal budget. Having initially signaled the intermediate extension of unemployment benefits, Trump administration oppose the move in the Senate discussions, per Politico. Additionally, the size of the aid package, Democrats offer $3.5 trillion against Republicans’ bid of $1.0 trillion, offers extra uncertainty over the much-debated plan after European leaders’ ability to deliver 750 billion Euros of help to the economy.

Elsewhere, the positive updates concerning the coronavirus (COVID-19) vaccines fail to defy the surge in the US, Australia and Japanese pandemic numbers. The global count is inching close to 14.00 million new cases with America being on the top.

As a result, the S&P 500 Futures mark 0.10% of a drop to 3,263 after Wall Street marked mildly positive closing the previous day. Elsewhere, Australia’s ASX 200 losses 0.34% to 6,054 while New Zealand’s NZX 50 print no moves around 357.00.

Considering the two-day holidays in Japan, coupled with a lack of major data/events elsewhere, traders will have to keep eyes on the risk catalysts for fresh impetus. In doing so, virus news, US-China updates and fiscal budget headlines will be the key to watch.

Technical analysis

While the monthly low near 106.60 restricts the pair’s immediate downside, a 50-day SMA level of 107.47 challenges the short-term advances.

 

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