USD/JPY: Firmer above 21-DMA amid risk-on, sluggish Japan data

• USD/JPY rise further as sluggish data from Japan adds to previous trade-led risk-on.
• Escalating equities and bond yields offered additional strength to the upside.

USD/JPY extends the previous run-up beyond 21-DMA as it takes the bids to 106.50 during early Friday.

The pair initially stretched the earlier recovery based on optimism surrounding the US-China trade optimism after China turned down the September 15 tariff hike on the US goods in search of better negotiations during next month’s talks.

The advances later-on gained momentum as Japan’s Tokyo Core Consumer Price Index (CPI) and Retail Trade spread disappointment. Further, positive reading of S&P 500 Futures, rising Asian equities and the US treasury yields also offer background music to the markets’ risk-on.

Traders mostly ignored news concerning arrests of key protesters in Hong Kong as well as the US launching Space Command to counter threats from Russia and China.

While trade/political news will keep directing near-term market sentiment, Personal Income/Consumption, Chicago Purchasing Managers’ Index and Michigan Consumer Sentiment Index from the United State (US) will also entertain market players.

Technical Analysis

A three-week-old falling trend-line near 106.70 becomes immediate resistance to watch whereas 21-day simple moving average (DMA) can limit pair’s near-term declines.