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  • Risk-off remains at full steam on the second wave of coronavirus.
  • USD/JPY tracks Asian equities, S&P 500 futures lower.
  • Yen appears to regain its safe-haven status, as USD tumbles.

USD/JPY is testing the key 107 support, with risks skewed to the downside amid deteriorating risk sentiment, as we head into early Europe.

The Japanese yen seems to have regained its safe-haven status, as the fears over the second-wave of the coronavirus grow and prompt investors to run for cover amid tumbling Asian stocks and US equity futures. The Japanese benchmark, the Nikkei 225 index tanks over 2.50% while the S&P 500 futures shed 2%, at the time of writing.

The rapid rise in new infections in the US, Japan and China has reinforced concerns over the second-wave, with Beijing resorting to harsh lockdown measures after 36 new cases were reported earlier today. The downbeat Chinese activity numbers also adding to the souring market mood.

The US dollar failed to benefit from the risk-off trading, as the sell-off in the US Treasury yields dragged the greenback broadly lower. The broad US dollar slide further collaborated with the bearish momentum in the spot.

Further, the yen also garnered some strength from the Japanese Prime Minister (PM) Shinzo Abe’s remarks. Abe pledged to do everything possible to put the economy on the recovery path.

Looking ahead, the sentiment on the global stocks will continue to have a major bearing on the spot, with the incoming virus updates to hold the key amid lack of significant economic data due for release on Monday.

USD/JPY technical levels to consider

From a short technical perspective, a break below 107.00 would expose Friday’s low of 106.58. The next support awaits at 106 (round number). The 50-DMA at 107.55 could cap the immediate upside, above which 107.95 (10-DMA) could be tested.

USD/JPY additional levels

 

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