Search ForexCrunch
  • USD/JPY remains pressured near monthly low even as sellers catch a breather off-late.
  • Japan PPI eased on MoM, improved YoY in January.
  • Tokyo conveys challenges to Pfizer vaccinations amid syringe shortage.
  • US inflation, stimulus and Fed Chair Powell’s speech will be the key.

USD/JPY sellers flirt with the intraday low of 104.53 as markets in Tokyo open for Wednesday. In doing so, the yen pair marks the least downside momentum than the previous three as traders look for fresh clues. However, broad US dollar weakness keeps favoring the bears.

Despite fresh upside in the US Treasury yields, which mainly dragged the US dollar index (DXY) down from the two-month high, the greenback gauge remains mostly unchanged around the two-week low. The reason could be traced from the downtick in Japan’s Nikkei 225, contrary to mild gains by the S&P 500 Futures.

The risk barometers might have struggled due to the US covid stimulus gridlock and cautious sentiment ahead of the US Consumer Price Index (CPI) data. Also challenging the mood could be the on-going investigation of the coronavirus (COVID-19) traces by the World Health Organization (WHO) team in China.

Furthermore, Kyodo news said, “Japan is unlikely to inoculate as many people with Pfizer Inc.’s COVID-19 vaccine as planned due to a shortage of special syringes capable of extracting the final dose from vials provided by the drugmaker, Health Minister Norihisa Tamura said Tuesday.” The Japanese media also cited calls for China to take adequate responsibility to identify the origins of the novel coronavirus.

It should be noted that the mixed readings of Japan’s Producer Price Index (PPI) for January also weigh on the quote. The factory-gate inflation data eased to 0.4% while matching the forecast, versus 0.5% MoM prior, but recovered on the yearly format from -2.0% to -1.6%.

Looking forward, US CPI will be the key as reflation woes are back in motion. Also important will be the updates over the US covid relief package and report from the WHO.

Read: US Consumer Price Index January Preview: Can consumer demand spur prices?

Technical analysis

Although sustained reversal from 200-day EMA, currently around 105.40, favors USD/JPY sellers, 50-day SMA and one-month-old support line near 104.25 becomes a tough nut to crack for them.