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  • USD/JPY refreshes intraday high as Tokyo open pleased greenback buyers.
  • US Treasury trading restored after a long weekend, initial losses lured US dollar bulls.
  • Uncertainty over the American stimulus, US-China tussle and COVID-19 woes are the latest catalysts.
  • Japan’s Money Supply increased in September from 8.1% to 9.0% YoY.

USD/JPY eases from the recently marked intraday high of 105.40 to 105.35 amid the initial hour of Tokyo open on Tuesday. While the restart of the US treasury trading, after Monday’s holiday, initially highlighted the risk-off mood, traders seem to reanalyze the catalysts by the press time.

US 10-year Treasury yields slip to 0.75%…

Be it the challenges to the US coronavirus (COVID-19) stimulus or China’s dislike of American weapon sales to Taiwan, not to forget the virus woes, everything favored risk aversion wave as American bonds returned to trading on Tuesday. On the other hand, vaccine hopes and news that US President Donald Trump tested negative for the COVID-19 tried to placate the pessimists.

Talking about the data, Japan’s September month Money Supply increased from 8.6% prior and 8.1% forecast to 9.0% MoM. On Monday, Bloomberg came out with the analysis citing threats to the market’s environment emanating from the BOJ’s excessive monetary easing. The research cited market woes during the times when the Japanese central bank will gradually reverse the measures.

Against this backdrop, the US 10-year Treasury yields drop two basis points (bps) to 0.75% whereas the S&P 500 Futures decline 0.35% by the press time. Further, Japan’s Nikkei 225 drops 0.10% intraday whereas stocks in Australia and New Zealand are mildly up.

The declines in the bond yeilds and stocks drove traders towards the US dollar, whcih in turn helps the US dollar index (DXY) to gain 0.11%, at 93.14, by the time of the press.

Moving on, a lack of major data, except for China’s trade numbers, can keep the pair traders directed towards the risk factors for near-term directions. In doing so, the US fiscal help update and the coronavirus news will join the Sino-American tension to lead the catalysts.

Technical analysis

Despite the pair’s bounce 21-day SMA and previous support line from September 21, respectively around 105.40 and 105.70, will challenge the short-term USD/JPY buyers.