- Uptick in US and European equity futures point to risk recovery.
- US dollar slips across the board on improving market mood
- Oil-price slump still remains a concern ahead of a quiet docket.
USD/JPY is testing lows near the midpoint of the 107 handle in early European dealing, with the latest leg down driven by the extension of the retreat in the US dollar from two-week highs reached against its main competitors on Tuesday. The US dollar index dropped to lows of 100.07 before recovering some ground, still down 0.15% on the day.
The recovery in the risk sentiment, reflective of the uptick in the US and European equity futures, dents the haven demand for the greenback. Meanwhile, markets digest the news that US Senate approved a Bipartisan agreement was reached on $320 bln additional funds for coronavirus.
On the JPY-side of the story, the anti-risk Japanese currency continues to find support from recent oil-price collapse led investors’ concerns while the fallout of the virus outbreak on the global economic growth continues to weigh on the sentiment and in turn renders JPY-positive.
However, a lack of certainty on when the state of emergency will be lifted in Japan and downbeat domestic macro news could likely keep the yen’s bullish momentum in check. Also, the gains in the JPY could be limited by the expectations of the Bank of Japan (BOJ) support measures to boost funding for the companies due to be announced next week.
Looking ahead, the spot will remain at the mercy of the risk trends and dollar dynamics, in absence of relevant US economic data releases later on Wednesday. At the press time, USD/JPY trades at 107.58, down 0.16% so far.
USD/JPY technical levels to consider
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