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  • USD/JPY probes the latest recovery from 107.66, seesaws around 107.70 off-late.
  • Markets were mostly quiet amid US/UK holidays, US President Trump’s Hong Kong specific comments awaited.
  • The gradual reopening of economies offers mild risk-on sentiment.
  • US-China tussle, trade/virus updates are the key for near-term direction.

USD/JPY buyers catch a breath near 107.70 at the start of Tuesday’s Asian session. While the absence of traders from the UK and the US seems to have limited the market’s reaction to the US-China tension on Monday, hopes of economic restart and no comments on Hong Kong from US President Donald Trump seem to favor mild risk-on sentiment. Though, the latest comments from China’s Wuhan, followed by US President Trump’s election talk, recently offered some moves to the pair.

Hong Kong issue needs Trump’s push…

Despite Hong Kong protesters’ back to street approach, for the first time in 2020, risks paid a little heed as US President Donald Trump is yet to react to China’s rush towards crushing Hong Kong’s autonomy.

The Republican leader recently crossed wires but refrained from targeting the Asian major on Hong Kong issue while promoting thyself before the election.

On the other hand, director of the Finance and Securities Institute at Wuhan University of Science and Technology followed the footsteps of other Chinese diplomats to harshly criticize the US.

The economic restart offers a light at the end of the tunnel…

In addition to the absence of US-China led risk aversion, the market’s trading sentiment is also supported by the gradual reopening of economies.

That said, talks concerning the cure of the coronavirus (COVID-19), recently from Novavax, also offered a mild strength to the risks.

Amid all these catalysts, US stock futures remain mildly positive whereas bund yields stood on the back foot by the end of Monday’s trading session.

Investors may now keep eyes on the fresh signals concerning the US-China relations, be it trade and or political, for immediate direction. It should also be noted that Japan’s All Industry Activity Index and the US Dallas Fed Manufacturing Index, coupled with housing data, will decorate the calendar.

Technical analysis

Unless declining below 21-day EMA, currently near 107.35/40, USD/JPY can keep its gradual rise towards 108.05/10 key resistance area comprising 100-day EMA and multiple highs marked since mid-April.