- USD/JPY stays pressured after upbeat Japan data, amid risk-off mood.
- Japan’s preliminary Q2 GDP crossed upbeat forecasts on QoQ, annualized format.
- Market sentiment sours amid fears that covid Delta variant will ruin the economic recovery.
- Risk catalysts occupy the driver’s seat amid a light calendar.
USD/JPY remains on the back foot around 109.50, the lowest in a week, after an upbeat Japan Q2 GDP release on early Monday. The yen pair dropped the most in five weeks the previous day on the US dollar weakness and heavy Treasury yields.
The preliminary readings of Japan’s Q2 GDP rose past 0.2% forecast and -1.0% prior to +0.3% on QoQ whereas the annualized figures also jumped past 0.7% market consensus and upwardly revised -3.7% previous readouts to +1.3%. On the contrary, Gross Domestic Product (GDP) Deflator dropped below -0.1% prior and -0.4% expectations to -0.7% YoY during the stated period.
In addition to the firmer Japanese growth numbers, the risk-off mood also favor USD/JPY sellers. The record hospitalizations for 30–39 years old in the US and all-time high infections in Japan, per the latest government figures, challenge the global recovery from the pandemic.
The economic fears fanned Friday after the US Michigan Consumer Sentiment Index dropped to a 10-year low and dragged the US 10-year Treasury yields by the most since July 06.
Amid these plays, S&P 500 Futures drop 0.12% whereas the US 10-year bond coupon declines 1.7 basis points to 1.28% by the press time.
Looking forward, a light calendar in Asia, except for the China data dump, could keep USD/JPY traders on the search for qualitative catalysts for fresh impulse. It’s worth mentioning that the challenges to the previous risk-on mood seem to favor the risk-barometer pair’s sellers.
Technical analysis
USD/JPY bears flirt with 100-DMA, near 109.70 on their way south to an ascending support line from April 23, around 108.85. Meanwhile, buyers are likely to remain skeptical until the quote stays below the double-top surrounding 110.60 and the monthly top close to 110.80.
Read More: USD/JPY sellers keep reins below 110.00 amid firmer Japan GDP, downbeat