USD/JPY stays depressed around mid-103.00s amid uncertainty over US stimulus

• USD/JPY extends the previous day’s pullback from 103.84.
• US Senate Majority Leader Mitch McConnell obstructs $2,000 paycheck, Senate votes on the key stimulus item.
• Colorado registers the first covid variant case found in the UK, without travel history.
• Light calendar ahead of the North American session keeps risk catalysts on the driver’s seat.

USD/JPY sellers attack intraday low of 103.42 during the initial hour of Wednesday’s Tokyo trading. In doing so, the yen pair drops for the second consecutive day as US coronavirus (COVID-19) stimulus details are up for voting in the Senate.

Other than McConnell’s challenge to the $2,000 paycheck proposal of Democrats, also favored by President Donald Trump, fears over the new strain of the virus also challenge the market sentiment and weigh on the USD/JPY prices.

Recently, the US registered its first case of the virus variant found in the UK and the worrisome fact is that the infected person doesn’t have any travel history. Following that Japan’s Kyodo News said, “The Japanese government has decided to suspend special entry conditions for athletes and team staff from countries and regions where new, potentially more infectious variants of the coronavirus have been found, sources with knowledge of the matter said Tuesday.”

It should also be noted that countries like the Philippines and Indonesia have also raised entry barriers. Additionally, India marks a few more cases of the stated version of the virus that spreads faster.

During the previous day, global markets cheered the US House passage of the $2,000 paycheck even as the policymakers override Trump’s veto over the defense bill.

It’s worth mentioning that a 5.0 magnitude earthquake in Tokyo also contributed to the risk aversion wave.

Amid these plays, coupled with an absence of major data/events, risks remain heavy after Wall Street benchmarks closed negative following Tuesday’s opening jump to a record high. Further, the US dollar index (DXY) remains downbeat whereas the S&P 500 Futures wavers around 3,700 by press time.

Moving on, updates from the US Senate and virus news can offer intermediate moves ahead of the North American session where second-tier activity and housing from the US can entertain USD/JPY traders.

Technical analysis

Unless breaking 21-da SMA, 103.78 now, USD/JPY bears can’t avoid revisiting the monthly low of 102.87.