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  • USD/JPY awaits fresh signals, nears two-week low.
  • US dollar weakness weighs on the pair, risk-tone remains positive.
  • A light economic calendar in Asia will keep virus updates in the driver’s seat.

USD/JPY extends the pullback moves from 107.00 while flashing 107.20 ahead of Wednesday’s Tokyo open in Asia. Despite the recent consolidation, the yen pair stays near two-week low amid broad US dollar weakness and upbeat trade sentiment. A lack of major data during the Asian session might keep traders pushed to the coronavirus (COVID-19) updates for fresh impulse.

Given the lack of major negatives concerning the virus, despite regular fatalities in the developed world, the market’s trade sentiment stays positive amid calls of the early economic restart in the US. The moves gained momentum after upbeat trade balance data from China and the reiteration of the readiness to act by the Bank of Japan’s (BOJ) Governor Haruhiko Kuroda.

The global coronavirus case numbers are rising sharply towards the two million mark, with over 125,000 death toll, but the recent increase in the data have been slower than the previous outbreak. Also, the US and the UK policymakers are expecting a peak in the next three to four weeks and hence add support to the risk-on.

Further to the pair’s weakness could be the broad US dollar weakness amid a lack of major data and the Fed’s readiness to keep the market’s liquid.

While portraying the risk-on momentum, Wall Street closed Tuesday in green whereas the US 10-year treasury yields also stay on the positive side around 0.76% by the end of their trading on the previous day.

Considering the absence of major catalysts in Asia, traders will keep eyes on the key driver, namely the virus updates, for fresh impetus. As per the latest update, New York city revised the death toll to shoot it above 10,300, per New York Times.

Technical analysis

A three-week-old falling trend line near 108.05 could keep the pair’s short-term upside capped. On the downside, sellers will seek fresh entries below the monthly low surrounding 106.90.