USD/JPY stays above 105.50 despite sluggish US T-yields

• USD/JPY probes intraday high near 105.70, trims the previous day’s losses.
• US dollar regains the bull’s attention as Trump’s statements, virus woes and Brexit fears favor safe-haven buying.
• BOJ’s Kuroda also struck a modest tone at the 62^nd Annual Meeting of the National Association for Business Economics.
• Japan’s Preliminary Leading Economic Index for August will be eyed for immediate direction, risk catalysts keep the driver’s seat.

USD/JPY stays mildly positive while taking the bids near 105.70, up 0.04% intraday, amid the initial hour of Tokyo open on Wednesday. The yen pair recently gained bids as the Bank of Japan (BOJ) Governor Haruhiko Kuroda praised economic conditions while also highlighting fears of the coronavirus (COVID-19). It’s worth mentioning that the pair dropped the previous day as US President Donald Trump challenged bipartisan negotiations for the COVID-19 stimulus.

Cautious optimism for Asia…

In his latest statement at the US National Association for Business Economics, reported by Reuters, BOJ Governor Kuroda said, “Asia's economic conditions remain severe but the downturn in growth has been moderate compared with that of other regions.”

Even so, the rush to risk-safety drives the greenback northward amid chatters over the US aid package. Following Trump’s rejection of the talks, US House Majority Leader Mitch McConnell backed the White House leaders’ decision even as House Speaker Nancy Pelosi said that the negotiations were near the outcome.

Fears of the surge in the virus-led deaths from the US and the increased pressure to recall national lockdown on the UK PM Boris Johnson offer additional challenges to the market’s risk tone. Furthermore, the British angst over China’s treatment of Uighur Muslims becomes extra negatives for the mood.

As a result, S&P 500 Futures drop 0.25% even as the US 10-year Treasury yields seesaw near 0.74% after declining over two basis points (bps) the previous day. Further, Japan’s Nikkei 225 declines more than 100 points, down 0.50% intraday, while flashing 23,300 as a quote.

Moving on, the flash readings of Japan’s Coincident Index and Leading Economic Index for August, forecast 76.4 and 89.4 respectively, can offer nearby direction to the pair ahead of the Fed minutes, up for publishing during the US session. It should, however, be noted that the risk catalysts will remain on the driver’s seat and shouldn’t be ignored.

Technical analysis

A daily closing beyond the 50-day SMA level near 105.80 becomes necessary to convince USD/JPY buyers.