USD/JPY Falters Tuesday As Tokyo Emergency Draws Nigh

USD/JPY slid Tuesday as the greenback lost ground amid reported corporate hedging flows, jitters linked to the Georgia runoff elections and rally in crude oil prices. The rate was additionally weighed on by the growing perception that a state of emergency in Tokyo and three surrounding areas may soon come to fruition. USD/JPY printed its worst levels in 10 months.

• Potential state of emergency order in the Tokyo area continues to dominate local press reports. The Mainichi noted that the gov't is set to re-introduce tighter restrictions on event capacity in the region, while the Nikkei said that officials will maintain the suspension of the "Go To" campaign after Jan 12. Separately, the Nikkei reported that the gov't will outline criteria for lifting the state of emergency based on six infection indicators, including the weekly no. of new cases per 100k people.
• The rate last sits at Y102.67, 5 pips worse off. A break under Mar 10 low of Y102.02 would bolster the bearish case. Bulls look for a rebound above Dec 31 high of Y103.32, followed by the 20-EMA coming in at Y103.42.
• Japanese consumer confidence and final readings of Jibun Bank Services & Composite PMIs hit the wires today. Cash earnings are due Thursday, while household spending will be published Friday.
• In addition, previously cited press reports suggested that Japan's central gov't may announce its decision on declaring a state of emergency in Tokyo and three neighbouring prefectures as soon as Thursday.