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  • USD/JPY remains in downside consolidation on the 109.00 level.
  • Rising covid cases in Asia hurt stocks, lifts the USD demand.
  • Gains in S&P 500 futures offer support, as focus shifts to US PPI.

Having found support at 109.00, USD/JPY attempted a recovery towards 109.50 in the overnight trades. However, the sellers fought back control, knocking off the pair to near the 109.20 region, where it now wavers.

The recovery attempts in the spot remain  capped by the risk-off mood, as major Asian economies grapple with spiking covid infections, including South Korea, Japan and India. Some of these countries are back under lockdown restrictions, which is reflective of the negative tone seen in the regional indices.

However, the downbeat market mood-led revival of the haven demand for the US dollar has helped put a floor under the prices. The US dollar index recovers to 92.15, up 0.07% on the day, as of writing.

Additionally, the uptick in the S&P 500 futures combined with the stabilizing Treasury yields, following Thursday’s Fed Chair Powell-induced sell-off, renders USD/JPY supportive.

Meanwhile, on the JPY side of the equation, Japanese Chief Cabinet Secretary Katsunobu Kato said that the expert panel has agreed to firmer measures for Tokyo, Kyoto and Okinawa.    

Separately, the country’s Finance Minister Taro Aso commented that the G20s new terminology on currencies is merely a clarification. Attention now shifts towards the US PPI data, as markets absorb the dovish remarks from Fed Chair Jerome Powell.  

USD/JPY: Technical levels