USD/JPY lures buyers around mid-140.00s despite downbeat Japan Unemployment Rate, focus on risk catalysts

• USD/JPY picks up bids to reverse week-start retreat from the highest levels in six months.
• Japan Unemployment Rate eases, Jobs/Applicants Ratio remains static in April.
• Yields struggle ahead of full market’s return, challenges to sentiment from US debt ceiling deal favor Yen pair buyers.

USD/JPY regains upside momentum as it reverses the previous day’s corrective pullback from a six-month high near 140.50 amid early hours of Tokyo trading on Tuesday. In doing so, the Yen pair fails to cheer upbeat Japan data amid fresh challenges to the previous risk-on mood as full markets return.

That said, Japan’s Unemployment Rate eased to 2.6% in April versus 2.7% expected and 2.8% prior whereas the Job/Applicants Ratio remained static near 1.32 during the stated month.

USD/JPY began the week on a softer footing in reaction to US President Joe Biden and House Speaker Kevin McCarthy’s weekend announcement of an agreement to avoid the debt-ceiling expiration. However, some of the policymakers, mostly Republicans, are against the comprises made to reach the deal and stay ready to challenge the move in the House, as well as in the Senate, which in turn raises market fears as the US approaches the June 5 deadline for default.

Elsewhere, the recently upbeat US data propel the hawkish Fed bets despite fears that the US debt-limit agreement advocates for more bond issuance and negatively affect the market’s liquidity. The same, however, struggles with the challenges for the Bank of Japan’s (BoJ) further dovish bias amid recently firmer inflation numbers from the Asian major.

Amid these plays, S&P500 Futures print mild losses while the yields regain upside momentum after a downbeat start of the week. With this, the USD/JPY pair can keep the latest rebound on the table to challenge the yearly high marked in the last week.

Moving on, developments about the US debt ceiling agreement and the US CB Consumer Confidence for May will be crucial for the US Dollar Index traders to watch for intraday directions of the USD/JPY pair.

Also read: US Consumer Confidence Preview: Confidence remains down, but DXY aims up

Technical analysis

USD/JPY buyers appear running out of steam but the sellers need validation from the 200-DMA support of around 137.30 to convince the Yen pair bears.