USD/JPY: Bulls and bears jostle near seven-week low around 106.50

• USD/JPY struggles for direction near the lowest since May 07 amid mixed clues.
• Sluggish play at Tokyo, downbeat S&P 500 Futures signal traders’ cautious mood.
• US-China tussle, fears of virus wave 2.0 confront Japan’s further easing of lockdown restrictions.
• BOJ Summary of Opinions struck a balanced tone, Japan’s Corporate Services Price Index slipped below forecasts.

Having initially refreshed the intraday low to 106.39, USD/JPY takes a U-turn to 106.53 as trading in Tokyo begins for Wednesday. Even so, the yen pair remains near a multi-day low of 106.08 flashed the previous day.

The quote’s latest moves could be attributed to the mixed play of drivers. The news of further easing in lockdown restrictions and the BOJ’s cautious optimism favor the Japanese currency. On the contrary, fears of fresh US-China tussle and receding odds of the successful trade talks between the UK and Japan, coupled with the coronavirus (COVID-19) woes, weigh on the market’s risk-tone and drag the pair southwards. Also acting as a catalyst could be Japanese Corporate Services Price Index data for May. The statistics drop below 1.1% forecast to 0.8% during its latest release.

During the previous day, the US dollar dropped across the board amid receding safe-haven demand and escalating pandemic numbers from the southern states. The risk-tone gained support from the hopes of a $1.5 trillion stimulus package from the US as well as upbeat global PMIs.

While portraying the current trading sentiment, S&P 500 Futures seesaw around 3,120, up 0.10%, with Japan’s Nikkei 25 and the US 10-year Treasury yields printing mild gains as we write.

Looking forward, fresh doubts over the US-China trade relations will join the broad pessimism surrounding the deadly disease to direct near-term market moves amid a light calendar. Even so, Japan’s Leading Economic Index for April, expected to remain unchanged at 76.2, could offer intermediate moves to the pair.

Technical analysis

Even if the pair’s sustained trading below the key SMAs keeps the bears hopeful, May month low of 105.99 challenges the further downside. Meanwhile, 50-day SMA near 107.40 acts as the immediate resistance to watch during the pair’s recovery.