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  • USD/JPY refreshes intraday high to 106.30, carries Wednesday’s recovery moves.
  • Japan’s Machinery Orders flashed upbeat marks, Tokyo up for taking down virus-led alert level.
  • US policymakers are to vote on fiscal package amendments, EU-UK meet in London will also be in the spotlight.
  • ECB policymakers moves, US Jobless Claims are extra directives to watch.

USD/JPY remains firm around 106.25, immediately following its run-up to 106.30, during the initial hour of Thursday’s Tokyo open. The yen pair recently benefited from Japan’s Machinery Order data while risk-positive news also favors the quote’s upside. It’s worth mentioning that the quote recovered from a one-week low the previous day as market sentiment turned positive and the US dollar snapped a six-day winning streak.

Traders stay positive despite the pre-ECB cautious mood…

Not only Machinery Orders’ better than forecast 1.9% rise to 6.3% in July but news that Tokyo will scale down its coronavirus (COVID-19)-led lockdown restrictions by one notch also pleased the USD/JPY buyers.

Further, comments from Goldman Sachs that the Pfizer’s candidate vaccine could be approved as early as October also add to the market’s positive sentiment and favor the pair.

On the contrary, the European Union’s (EU) dislike for the UK PM Boris Johnson’s alterations to the Brexit Withdrawal Agreement Bill and chatters concerning the Sino-US tussle keep the risk-on mood in check. Also, traders turn cautious ahead of the key European Central Bank (ECB) monetary policy, as well as the US Senate votes on the fiscal package, which in turn probes the bulls.

During the previous day, the US dollar index (DXY) stepped back from one-month high while Wall Street managed to consolidate the tech rout. Currently, S&P 500 Futures gain 0.10% whereas Japan’s Nikkei 225 adds 0.80% to 23,203. The rumors that the ECB policymakers are more optimistic joined TikTok parent’s negotiations with the US government offered the market’s risk-on performance on Wednesday.

Other than the ECB and the US Congress moves, Brexit talks in London and the weekly release of the US Initial Jobless Claims, expected 846K versus 881K prior, will also be the key to watch for the pair’s near-term trading direction.

Technical analysis

50-day SMA level of 106.32 holds the key to the pair’s further upside towards the monthly high of 106.55 and the previous month’s top surrounding 107.05.