USD/JPY stays choppy near 107.00 as market digests risk-on mood

• USD/JPY keeps Wednesday’s European session downside break of 107.00.
• Optimism surrounding virus vaccine confronts worsening situations in the US and Tokyo.
• BOJ held monetary policy intact, cited economic fears in the quarterly outlook.
• No major data/events from Japan but numbers from China, Australia will entertain Asian traders along with risk catalysts.

USD/JPY funnels down the below 107.00 area while taking rounds to 106.95 amid the pre-Tokyo Asian session on Thursday. The quote’s drop below 107.00 during Wednesday’s initial European session dragged it to the four-day low of 106.66. Following a bounce from that, the pair has been capped between 106.90 and 106.97/98.

Risk-on confronts downbeat news at home…

The global market’s upbeat sentiment, mainly driven by the news of nearness to the coronavirus (COVID-19) cure, failed to propel the risk barometer on Wednesday. The reason could be found in the broad US dollar weakness and economic pessimism cited by the Bank of Japan (BOJ). Also capping the pair’s moves could be worsening of the virus situations in America and Japan. Furthermore, the worsening of the US-China tussle adds to the fears and guards the pair moves.

The early signals of the virus vaccine from Moderna got a boost from the US President Donald Trump and health official, not to forget Oxford scientists, so far. The updates suggest that the world will soon overcome the deadly disease that has infected over 13.00 million people in the US and pushed Tokyo to raise alerts to the highest levels.

Further to boost the risk could be welcome US data and hopes of further stimulus from the global policymakers. While the US Senators are planning for the next package, BOJ hasn’t offered any clues in its latest monetary policy despite showing readiness to act.

Amid all these plays, S&P 500 Futures fade the upside momentum while easing to 3,220 from the recent high of 3,232. It should be noted that Wall Street and the US 10-year Treasury yields portrayed upbeat sentiment the previous day.

Looking forward, there are no major data/events from Japan but traders will have a busy session considering Aussie employment figures and Chinese GDP. Also likely to make markets active will be a few more updates on the virus vaccine.

Technical analysis

Tuesday’s bearish spinning top drags the quote towards the June month’s bottom near 106.00. A two-week-old falling trend line, at 107.25 now, becomes an immediate upside barrier.