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  • USD/JPY stays depressed after stepping back from one week high.
  • S&P 500 Futures print mild gains, Nikkei 225 off due to bank holiday in Japan.
  • Risks remain mildly bid following upbeat PMIs, increasing odds of a blue wave in America.
  • Off in Japan will join the pre-event trading lull to offer a boring Asian session.

USD/JPY fails to keep the previous three days’ update momentum while easing to 104.75, down 0.06% intraday, during Tuesday’s Asian session. Although trading sentiment recovered off-late, market fears ahead of the key US elections probe the bulls. Also challenging the previous run-up could be an absence of Tokyo traders and a lack of major data/events, except for the RBA.

All eyes on US elections…

Although holiday in Japan joins a light calendar to probe the pair’s latest moves, USD/JPY traders closely watch the 2020 US election polls for immediate direction. The latest forecasts suggest an interesting race between President Donald Trump and his rival Joe Biden. Earlier, the Democrats were the market favorite for retaking the controls in both the American houses, called a blue wave.

While the Democratic Party is considered prone to infuse more liquidity in the US markets, indirectly pumping the global assets, the ruling Republicans have also shown their interest to lose the strings in their latest public campaigns. Even so, nothing changes for the Sino-American tussle as well as the coronavirus (COVID-19) pandemic that is out of anybody’s reach and weighs on the risks.

Read: 2020 Elections: Three states traders should watch, plus places that could provide surprises

On Monday, global markets turned cautiously optimistic, after October month’s activity numbers from the US, China, Europe and Japan flashed upbeat readings. Also favoring the market mood could be the increasing odds of a soft Brexit as the European Union (EU) and the UK are near to breaking the deadlock over the key, fisheries.

Against this backdrop, Wall Street managed to defy Friday’s downbeat performance whereas the US 10-year Treasury yields remained mildly positive above 0.85%. It’s worth mentioning that the S&P 500 Futures print 0.35% intraday gains by press time.

While no major data/events ahead of the US elections can keep restricting the pair’s moves, cautious sentiment suggests US dollar recovery, which in turn can help the quote to refresh one week high.

Technical analysis

A one-month-old falling trend line, followed by 50-day EMA, restricts the USD/JPY upside around 105.30/40. Alternatively, 104.00 becomes the key support.