USD/JPY recovery stalls below 143.00, despite the brighter market mood

• US Dollar posts a mild rebound on risk appetite but remains capped below 143.00.
• Concerns about US fiscal recklessness are weighing on all US assets.
• The Yen trims losses ahead of Ueda's press conference, due on Tuesday.

The positive impact of the de-escalation of Trump's latest trade rift with the European Union has had a limited positive impact on the US Dollar. The USD/JPY is failing to find buyers above a previous support, now turned resistance, at the 143.00 area.

Trump calmed fears over the weekend as he announced a pause on the 50% tariffs on all EU imports announced on Friday. This news has boosted demand for risk assets, weighing on safe havens like the Yen. The US Dollar, nevertheless, seems unable to put a significant distance from Friday's low, at 142.35.

US debt fears are weighing on US Dollar's recovery

Investors are taking a cautious approach to all US assets. Last week, Moody's downgraded the US debt rating amid growing concerns that Trump's sweeping tax bill will inflate an already high US deficit, in times of softer economic growth.

The tax bill, which cleared the House of Representatives last week and will be debated in the Senate during the coming weeks, is expected to increase US debt by about $3.8 trillion over the next 10 years. This undermined confidence in US Treasury bonds and the US Dollar last week.

Trading vvol¡ume is thin today, with US markets closed on a bank holiday. In Japan, the focus will be on BoJ Governour Ueda's speech on Tuesday and Thursday's Tokyo CPI numbers. In the US, the Fed Minutes, on Wednesday, and US PCE Inflation on Friday will be the highlights of the week.