USD/JPY refreshes intraday top above 109.00 on downbeat Japan Q1 GDP
- USD/JPY reverses early Asian losses amid downbeat Japan data, risk-on mood.
- Japan’s Preliminary reading of Q1 GDP drops -1.3% QoQ versus -1.2% forecast, +2.8% prior.
- S&P 500 Futures print mild gains even as risk sentiment dwindles amid covid, inflation jitters.
- Fed’s signals, reflation chatters will provide fresh impulse.
USD/JPY takes the bids around 109.30, reversing the three-day losing streak on Japan’s Q1 GDP release during early Tuesday. Also backing the bulls could be the mildly positive market sentiment as well as a lack of negatives elsewhere.
Japan’s Q1 GDP dropped more than -1.2% QOQ to -1.3% while the Annualized GDP figure slipped beneath -4.6% expected to -5.1% during early Tuesday.
Read: Japan GDP misses expctations by 0.1% QoQ
Although downbeat Japan data recently propelled USD/JPY, risk aversion weighs on the pair prices, due to its risk-barometer status. The market sentiment has been mixed of late as traders seek strong clues to justify the reflation fears while the coronavirus (COVID-19) woes keep testing the intermediate optimism, mainly emanating from the West.
Also on the risk-negative side could be the headlines from Gaza suggesting further hardships in the Middle East as well as the US-China tension.
Alternatively, the global push for the covid vaccine patent waiver and the US readiness to share more jabs with needy nations join the unlock announcements in the West to favor the optimists.
Amid these plays, S&P 500 Futures consolidate the previous day’s losses while printing 0.16% intraday gains by the press time.
However, the bulls need more clues to justify the latest run-up, which is in lack for Tuesday. As a result, the USD/JPY trades can extend the ongoing bearish trend unless any strong positive surprises pop up.
Technical analysis
A confluence of 10-day and 50-day SMA restricts the USD/JPY pair’s immediate downside around 109.10. Meanwhile, a sustained break of 109.70–80 region becomes necessary for the bulls to retake controls.