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  • USD/JPY consolidates the biggest gains since March 19.
  • Vaccine-led optimism fades, Japan data came in mixed.
  • Risk catalysts will lead the traders amid a light calendar.

USD/JPY sellers attack intraday low near 104.85, down 0.47% on a day, during the early Tuesday. The pair surged to the three-week high the previous day, amid a broad risk-on mood, before taking a U-turn from 105.64.

Although expectations that the coronavirus (COVID-19) vaccine is nearby, as cited by Pfizer and US Heath official Dr. Anthony Fauci, a few more weeks of virus infection threatens the market sentiment when figures from the US and Europe become worrisome. Also challenging the mood could be the American sanctions on Chinese diplomats over the Hong Kong issue as well as the European tariffs on the US goods worth $4 billion.

Against this backdrop, S&P 500 Futures drop 0.50% while Japan’s Nikkei 225 and Australia’s ASX 200 trim the early-day gains by press time. Further, the US 10-year Treasury yields also part ways from the recent uptrend while losing four basis points to 0.91% by the time of writing.

Talking about the data, Japan’s Current Account slips below ¥1994.9 B forecasts to ¥1660.2 B in September whereas Trade Balance rose past- ¥144.4 B market expectations to ¥918.4 B.

Given the lack of major data/events, USD/JPY traders should look for risk events/updates for fresh direction.

Technical analysis

A downward sloping trend line from July 01, currently around 105.45, keeps restricting the USD/JPY bulls, which in turn directs sellers towards the October-September lows, near 104.00.