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3 May 2021

USD/JPY refreshes intraday high above 109.00 amid holiday in Japan, mild risk-on mood

  • USD/JPY extends early Asian gains amid a lack of fresh catalysts.
  • Yellen’s push for Biden’s stimulus pleased risk-takers despite geopolitical challenges concerning China, North Korea and Iran.
  • Fed’s Kaplan wants to talk about tapering but gets mostly ignored.
  • US PMI figures, risk catalysts can entertain traders even as fewer moves are expected.

USD/JPY stays positive around 109.40 during Monday’s Asian session. Friday’s sustained run-up beyond 21-day SMA and the US dollar’s strength propels the quote to flash a three-day winning streak. However, Japan’s holiday and a light calendar elsewhere in Asia restrict the pair’s immediate moves.

Even so, no deal between the US and Iran, as well as North Korea’s indirect warning to the US, question the risk-on mood. On the same side are the latest comments from US Secretary of State Antony Blinken for China. The key diplomat recently said, per Reuters, “Our purpose is not to contain China, to hold it back, to keep it down. It is to uphold this rules-based order that China is posing a challenge to.”

Futhermore, Japan’s record patients having severe covid symptoms, of 1,050, also weigh on the risk-on mood.

It’s worth mentioning that the Dallas Federal Reserve Bank President Robert Kaplan was the first among the Fed policymakers to back discussion over tapering on Friday. This should weigh on equities and back the US dollar but the chatters seem to have ignored it of late.

Meanwhile, US Treasury Secretary Janet Yellen’s support for President Joe Biden’s stimulus plan by saying that the administration's proposals “are extremely important and necessary to invest in our economy so that we can be competitive,” also back the risk-on mood.

Amid these plays, S&P 500 Futures print 0.40% intraday gains while the US dollar index (DXY) struggle for a clear direction after Friday’s heavy run-up.

Given the likely absence of major catalysts, USD/JPY may remain subdued ahead of the US session whereas April’s PMI figures will entertain markets.

Read: US Purchasing Managers’ Index April Manufacturing Preview: Let the good times roll

Technical analysis

A clear break above 21-day SMA, around 108.90, directs USD/JPY towards 109.70 immediate hurdles.

 

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