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  • USD/JPY picks up bids, refreshes intraday top as bears catch a breather.
  • Market sentiment improves as a team led by IMF, WHO calls for $50 billion investment to battle covid.
  • Upbeat US ISM Manufacturing PMI, receding virus woes add to the risk-on mood.
  • Light calendar keeps traders searching for clues, inflation, central bank and virus headlines are the key to follow.

USD/JPY consolidates the weekly losses by picking up bids to refresh intraday high with 109.54, up 0.06% on a day, as markets in Tokyo open for Wednesday. The risk barometer seemed to have taken clues from the hopes of further stimulus and upbeat US Treasury yields while snapping a two-day downtrend.

Following a strong start to the week, US 10-year Treasury yields stay positive around 1.618% by the press time. The same help the S&P 500 Futures to reverse early Asian losses and help the USD/JPY to portray a mild risk-on mood.

The recently ebbing covid infections in Japan, backed by a strong vaccinations drive, join strong US ISM Manufacturing PMI to offer an initial cause of the market optimism. On the same line could be the Kyodo News piece saying, “The International Monetary Fund, the World Health Organization and other institutions on Tuesday jointly called for a $50 billion investment to support developing countries in their fight against the novel coronavirus and to keep the global economic recovery on track.” Japan being on the list helps the market to aim for further stimulus and faster economic recovery.

On the same line could be the chatters concerning the US President Joe Biden’s $6.0 trillion budget and $1.7 trillion infrastructure spending plan that has kept the markets on their toes of late.

It’s worth noting that the jump in the US ISM Manufacturing PMI couldn’t propel the inflation and employment component, which in turn suggests the further need for the easy money policy and ward off the tapering risk, offering another reason to back the USD/JPY bulls.

Looking forward, a light calendar will keep USD/JPY traders searching for strong clues and observe headlines concerning the coronavirus, monetary policy and fiscal stimulus for fresh impulse.

Technical analysis

Unless crossing 109.70-80 horizontal hurdle, comprising multiple levels marked since early May, USD/JPY pullback towards 109.20 support confluence including 21-day and 50-day SMA can’t be ruled out.