USD/JPY keeps recent gains around 104.50 even as Powell, Mnuchin flash mixed signals

• USD/JPY wavers around three-day high after snapping a four-day losing streak the previous day.
• Fed Chair Powell strikes downbeat comments, US Treasury Secretary Mnuchin pushes for stimulus.
• Riskier assets retreats, US dollar index bounces off April 2018 low.
• Japan Unemployment Rate, Jibun Bank Manufacturing PMI can offer immediate direction.

USD/JPY keeps the November-end gains around 104.40 during the pre-Tokyo open trading on Tuesday. The yen pair rose for the first time in the last five days on Monday as the US dollar marked comeback from the multi-month low on month-end position adjustments. Also favoring the bulls were challenges to the risk-tone amid economic fears as well as doubts over the US coronavirus (COVID-19) aid package. It should be noted that the mixed comments from the Fed Chair Jerome Powell and US Treasury Secretary Steve Mnuchin failed to disappoint the bulls.

Risks dwindle amid mixed catalysts…

Although the covid vaccine news got another boost from the Moderna’s announcement of 94% effective rate, downbeat comments from Japanese Economy Minister Taro Aso, conveying virus-led economic vulnerability, weigh on the risks. Not only Japan but chatters that the global economy will also need some more time, at least the final quarter of 2020, before flashing positive signs, also weigh on the market sentiment.

While identifying the need for another stimulus push, policymakers in Japan are already set for a trillion-yen package but the US cross-party team for the stimulus discussion keeps juggling over the much-awaited economic boost.

Recently, US Treasury Secretary Mnuchin urged Congress to repurpose $455 billion in unused CARES funds for stimulus. Contrary to the positive remarks, Fed Chair Powell, in his prepared statements for testimony, mentioned the medium-term economic impact of vaccine news while citing likely moderate growth ahead.

Against this backdrop, Wall Street ends November with mild losses on the daily chart, while keeping the monthly gains intact.

The pair traders will look for Japan’s October month Unemployment Rate and November’s Jibun Bank Manufacturing PMI, expected 3.1% and 48.3 versus 3.0% 48.3 respective prior, for immediate direction. However, risk catalysts to remain in the driver’s seat.

Technical analysis

Despite clearing a three-week-old falling trend line, USD/JPY needs a sustained run-up beyond 21-day SMA, currently around 104.50, to keep the recent upside momentum, failing to which can keep the ascending support line from November 06, at 103.95 now, on sellers’ radar.