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  • USD/JPY bulls keep the reins near one-month high.
  • Risks dwindle amid US politics, covid worries and stimulus hopes.
  • Japan’s Trade Balance eased, Current Account recovered in November.

USD/JPY picks up the bids near 104.20 during the initial hour of Tokyo open on Tuesday. In doing so, the yen pair rises for the fifth consecutive day as the US dollar strength and recent mild gains of S&P 500 Futures favor the bulls. It should, however, be noted that the downbeat performance of Nikkei 225 probes the upside momentum.

Other than the risk catalysts, mixed data at home also confuse USD/JPY traders. Japan’s Current Account for November grew past- ¥1551 B forecast to ¥1878.4 B but Trade Balance – BOP Basis eased from ¥971.1 B to ¥616.1 B during the stated month.

Chatters surrounding US President Donald Trump’s impeachment and the Democratic Party’s push for the covid stimulus have recently gained momentum. While political uncertainty in the world’s largest economy challenges the risks, coupled with the virus woes, expectations of fiscal stimulus favor Fed policymakers to stay cautiously optimistic.

It’s worth mentioning that the virus conditions at home have worsened off-late even as the government has already announced a lockdown in Tokyo and three neighboring areas. Recent updates from the Kyodo news said, “Japan is set to expand a state of emergency declared over the coronavirus pandemic to Osaka, Kyoto and Hyogo prefectures, government and ruling party sources said Monday.

On a different page, the US-China tussles are also escalating off-late and weigh on the risks. As per the latest news, China conveyed the arrival of World Health Organizations’ (WHO) officials for an inquiry into the covid trace after initially criticized for not cooperating. Also, stories suggesting the Trump administration prepare new sanctions and Beijing’s dislike for the US interference in Hong Kong and Taiwan issues portray the Sino-American tension.

Amid these plays, S&P 500 Futures and Japan’s Nikkei 225 are both printing mild gains by press time. Additionally, the US 10-year Treasury yields also remain on the front foot above 1.0%.

Moving on, Japan’s Eco Watchers Survey for December can offer intermediate entertainment while risk catalysts are likely to remain as the key.

Technical analysis

The sustained beak of 50-day SMA, at 13.97 now, favors USD/JPY bulls to eye December high near 104.75.