- USD/JPY struggles to find direction, keeps taking rounds to familiar territory.
- A sigh of relief from the oil debacle, recovery in equities and hopes of economic restart are likely immediate catalysts.
- Second-tier data from Japan, virus updates remain as the key in Asia.
Despite staying beyond 108.00 since the start of the week, USD/JPY recently recovered from 107.50, currently around 107.78 amid the early Thursday morning in Asia. Mixed plays between the coronavirus (COVID-19) led pessimism and a pause in oil slump, coupled with a ray of hope from the US and the EU, seemed to have directed the pair’s recent moves.
Markets consolidate losses…
While the recent recovery in Wall Street, as well as a pause in the oil prices, pleases some traders, the moves aren’t a sign of risk-on. The coronavirus (COVID-19) led debacle is still not over and no actual efforts have been initiated by the oil majors despite showing readiness to do so. Further, US President Donald Trump will soon reveal whether he has signed the immigration ban for 60 days into the US or not whereas his championed drug has failed on the market expectations. On the positive side, the hopes of economic restart and flattening of the virus curves in the US and Europe seem to offer mild relief.
Pandemic fears keep risk-off hidden under the table…
Despite the recent stop in the surge of the COVID-19 figures, updates from China’s South China Morning Post (SCMP) renewed fears of the wider outbreak as the Chinese believe the virus has mutated rapidly.
Also questioning the risk-on could be the surge in Japanese virus data. Tokyo had a record of 2,796 cases by Friday while Japan’s total infections stand at more than 9,800, with 207 deaths, according to a tally by public broadcaster NHK.
That said, the US 10-year Treasury yields rose five basis points (bps) to 0.62% with Wall Street benchmarks posting over 2.0% gains each by the end of Wednesday.
Traders may now wait for the Preliminary readings of April month Japanese Jibun Bank Manufacturing PMI, prior 44.8, ahead of February month Leading Economic Index, expected to remain unchanged at 92.1. It’s worth mentioning that virus updates and oil price performance will remain as the key during Asia.
Technical analysis
In addition to 108.00 immediate upside barrier, 200-day SMA figures near 108.35 also question the pair’s short-term recoveries. On the other hand, 107.50 and the mid-month low close to 106.90 act as immediate supports.
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