USD/JPY holds onto recovery gains above 107.00 amid broad US dollar strength

• USD/JPY extends Wednesday’s pullback from the early-month low.
• Risk aversion keeps the US dollar on the front foot.
• US data, virus updates fail to support US President Donald Trump’s upbeat claims.
• US Jobless Claims, coronavirus news in focus.

USD/JPY remains mildly positive around 107.50 ahead of Tokyo open on Thursday. The yen pair bounced off two-week low the previous day amid broad US dollar strength, mainly driven by the risk aversion. Traders may now keep eyes on virus updates, US data for further short-term direction.

While there are many catalysts, ranging from downbeat US data to disappointing performance by the markets, behind the greenback’s latest strength, the surge in the coronavirus (COVID-19) fatalities seems to be the key.

With the US death toll setting the single-day record increase of 2,371 to 30,817 as per Reuters, the pandemic figures parted ways from the earlier pullback and renewed the risk aversion.

Not only the surge in fatalities, the International Monetary Fund’s (IMF) warning of the global recession in 2020, due to the epidemic, also weighed on the risk-tone.

Further to support the market’s rush for risk-safety could be disappointing US data led by a record drop in the Retail Sales.

While portraying the risk, US Treasury yields and Wall Street marked losses by the end of Wednesday in the US while stock futures linked to the S&P 500 and the DJI30 currently flash near 0.20% loss each.

Although virus updates are likely to remain on the driver’s seat, the US economic calendar will also be important to watch for the near-term direction.  The reason could be cited to the weekly Jobless Claims’ recent surge in millions because of the COVID-19.

Read: US Jobless Claims Preview: Facts that retain the ability to move markets

Technical analysis

The pair needs to break a descending trend line from March 25, currently around 107.85, to recall buyers targeting the monthly high near 109.40. On the contrary, a downside break below 106.90 could push the quote further down towards the sub-106.00 area.