USD/JPY follows mildly offered Nikkei 225 to probe one week high
|- USD/JPY extends Monday’s recovery moves to probe October 13 high.
- Japan’s Nikkei 225, Australia’s ASX 200 are both down by around 0.30%, S&P 500 Futures mark the same gains.
- Mixed updates concerning the US stimulus, Brexit trouble the pair traders ahead of US Housing numbers.
USD/JPY rises to 105.6, up 0.13% intraday during early Tuesday’s trading. The pair recently picked up bids as stocks in the Asia-Pacific region mark losses. Also helping the quote could be the US dollar bulls that cheer recently positive data and S&P 500 Futures’ snapping of the five-day losing streak.
Risk dwindles in Asia as US policymakers remain undecided over the much-awaited coronavirus (COVID-19) stimulus. While the US Senate leader Mitch McConnell indicates voting on the bill during this week, the Minority leader Chuck Schumer said that the Republican stimulus proposal remains unacceptable.
Elsewhere, the latest COVID-19 numbers from Europe marked a bit of relief after questioning the broad risk sentiment off-late. Furthermore, German Chancellor Angela Merkel recently said that companies should diversify to Asian markets beyond China. While the news offers negative signals to the mood, future optimism for Asia seems to have been considered recently.
It should be noted that the European leaders' readiness to negotiate the Brexit deal, despite the UK’s tough stand on the key issues, suggests a near-term solution to the multi-month-old problem.
With a light calendar in Asia, bearish comments from the RBA and RBNZ joins mixed risk catalysts to confuse USD/JPY traders. As a result, the bulls cheer broad US dollar strength while ignoring the domestic equity gauge.
Moving on, market players may keep eyes on the risk news for immediate direction before the North American session offers US Housing Starts and Building Permits data for September.
Technical analysis
The pair’s ability to cross 21-day EMA for the first time in a week enables it to confront a falling trend line resistance from August 28, currently around 105.85. Though, a 50-day EMA level of 105.75 may offer an intermediate halt during the rise. Meanwhile, a one-month-old rising trend line near 105.25 can probe the USD/JPY bears after a 21-day EMA level of 105.50.
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