USD/JPY Snaps Impressive Winning Streak, Japan Could Lift State Of Emergency Early

USD/JPY finished last week by snapping its longest winning streak in years, as both sides of the pair struggled amid dwindling demand for safe havens, which allowed the yen to become the worst G10 performer of 2021.

• Asahi reported that the Japanese gov't is considering lifting the state of emergency ahead of its scheduled expiry (Mar 7). Per the report, the gov't wants to hold meetings on Friday and could terminate the state of emergency in Gifu prefecture, depending on regional Covid-19 situation.
• Over the weekend, Kyodo reported that Osaka Gov Yoshimura may decide Tuesday whether to ask the central gov't to lifting the emergency in the city. Speaking at a meeting of National Governors' Association, Aichi Gov Omura noted that "the lifting of the state of emergency [in Aichi] is in sight."
• NHK cited Japanese Health Min as saying that "if the state of emergency continues for too long, it will cause social as well as economic problems."
• Implied USD/JPY 1-month volatility sits at 5.1400 after printing a one-year low of 4.9300 last week.
• The rate has oscillated within a tight range this morning, digesting headlines re: Japan's state of emergency & comments from U.S. Tsy Sec Yellen, who reiterated her calls for a sizeable stimulus package in the U.S.
• USD/JPY trades flat at Y105.40, with bears eyeing a firmer pullback after last week's (seemingly) false break of the 200-DMA & as the RSI has returned under the 70 threshold and now sits below that key level, just. A fall through Feb 4 low of Y104.98 would open up Jan 11 high & recent breakout level at Y104.40. Bulls see Feb 5 high of Y105.77 as their initial target. Above there would expose the 1.50 projection of the Jan 6 - 11 rally from the Jan 21 low at Y106.05.
• Japan will publish BoP current account balance shortly, with Eco Watchers Survey coming up later today. Earnings data & flash machine orders hit the wires tomorrow.