The reading of Japan’s Q1 GDP recovered from 1.3% forecast to 1.0% QoQ, as well as -3.9% compared to -5.1% as per annual report. It has to be noted that the sign of economy recovery despite the coronavirus (COVID-19)-led emergencies in major prefectures, favor the Japanese yen (JPY).

Separate figures portrayed that the wages rose in April at the fastest pace since 2018. “The larger-than-expected upward revision to Japan’s first-quarter GDP looks good on the outside but – based on the composition – is weak on the inside. One major factor behind the smaller contraction relative to the preliminary reading was an increase in private inventory. That could unwind in 2Q – making a recession more likely,” said an Economist.

Elsewhere. It has to be noted that the Japan’s government will extend a state of emergency in the Tokyo region for another two weeks because its medical systems are still strained by COVID-19 patients, the minister in charge of virus response said Friday.

“For two more weeks, we will keep the measure in place so that we can firmly ease strains on hospitals” to meet conditions for lifting the emergency measures, economic revitalization minister Yasutoshi Nishimura told reporters.

A recovery is expected to take off again once virus restrictions are lifted. Meanwhile, virus cases are falling and the vaccine drive is finally kicking into gear. More than 17 million doses have been administered now compared with just a million at the end of March. Most of those shots have come in the last three weeks.

Elsewhere, The Japanese government is considering issuing certificates from this summer to coronavirus vaccine recipients that would be necessary for them to travel overseas, government sources have said. With a growing number of countries checking visitors’ inoculation records as a border control measure, the “vaccine passport” is expected to facilitate business travel, the sources said Monday.

USD/JPY 4 Hour Chart:

Support: 109.08 (S1), 108.90 (S2), 108.63 (S3).

Resistance: 109.52 (R1), 109.80 (R2), 109.97 (R3).

Amidst all the necessary steps taken by the Japanese government to deal with the virus even though economist feels that yen is weak on inside, we expect an uptrend for yen. We expect a bullish trend for USD/JPY.