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  • USD/JPY fades upside momentum following the heavy run-up to 105.78 the previous day.
  • Doubts over US President Trump’s health, a light calendar tame earlier risk-on sentiment.
  • China’s irritation over TikTok, WeChat ban also weigh on the market’s mood.
  • Trump’s recovery, the Fed Chair’s speech will be the key drivers.

USD/JPY eases to 105.70, down 0.06% intraday, during Tuesday’s Asian session. The yen major recently lacked the strength after posting heavy gains the previous day. Traders may trace mixed clues concerning US President Donald Trump’s recovery from the coronavirus (COVID-19). Also weighing on the risk-tone could be statements from China that the US ban on certain applications defy the World Trade Organization (WTO) rules.

Trump gasps while breathing, China speaks during Golden holidays…

Following his departure from Walter Reed, US President Trump released a video to confirm that he will soon trail the presidential election race, after losing a high time off-late. However, the clip showed that the Republican leader is still struggling while speaking, which in turn raises concerns for his health. Also fueling the rumors could be comments from the White House that suggests 24-hour treatment for the American President while suggesting people near him to wear PPE.

Elsewhere, Reuters came out with the news suggesting a fresh push to the Sino-American tension even as China is up for the Golden week holidays. As per the piece, citing conversation during the latest WTO meeting, a Chinese trade official said, “restrictions by the United States on Chinese mobile applications TikTok and WeChat are in violation of the body’s rules.”

It should be noted that the recent chatter over the US and Japan’s trade relations seem to have pressed the market mood to the upside. The update from the US State Department cited $300 billion worth of goods and services trade between Washington and Tokyo.

Against this backdrop, S&P 500 Futures print mild gains below 3,400, currently up 0.10%, whereas Japan’s Nikkei 225 adds 0.45% while rising to 23,416. It should, however, be noted that the US 10-year Treasury yields struggle around 0.77% by the time of the press.

Moving on, global markets will keep eyes on Trump’s health updates and the forward path for the COVID-19 stimulus package talks. Also important will be the speech from Fed Chair Jerome Powell who will be eyed for any bullish clues after the recently mixed US data.

Technical analysis

A clear break beyond the 106.00 threshold becomes necessary for the bulls to challenge September high around 106.55.