USD/JPY eyeing 106 handle as fears of trade wars and Japanese political scandal ease off

• The USD/JPY is strongly rebounding up since Monday. 
• Risk-appetite has boosted the US dollar Index which is trading above the 89.50.

The USD/JPY is trading at around 106.77 up 0.36% on Tuesday so far as fears of trade wars between the US and China are starting to recede. US stock indices futures are back in the green since the open on Monday. 

“We argued that the talk of trade war was exaggerated,” says a BBH analyst. In the European session, the US Dollar Index has found support at the 88.95 level and has been steadily rising since then trading now at 89.61 at the time of writing and challenging the 200-period simple moving average on the 1-hour chart.

Over in Japan, the repercussions on the Moritomo loan scandal seems to be abating as the Nikkei is rebounding and the Yen is going down versus most majors as it loses its risk-heaven appeal for the time being. The budget bill for the next fiscal year will likely be passed on Wednesday and Mr. Aso, the Finance Minister, might decide to resign as he oversees the Tax Bureau. The would bring a major change to the current Abe government. 

Coming up next is the US S&P/Case-Shiller Home Price Index rose 6.4% over the year in January and later in the day the speech from the Atlanta Federal Reserve Bank President Raphael Bostic at the “HOP Global Forums 2018 Annual Meeting” in Atlanta at 15.00 GMT while there is no macroeconomic release from Japan.

USD/JPY weekly chart

The bulls are challenging last week’s open at 105.93, erasing more than 50% of the gains made by the bears last week, in less than 48 hours of trading.

USD/JPY daily chart

The bulls’next target is the 106 figure; followed by 106.63 swing high. To the flip side, support is seen at 105.42 low of the day and 104.63 which is the low made this Monday.