USD/JPY probes 108.00 following the latest risk reset

• USD/JPY benefits from the latest risk recovery, extends the previous day’s gains.
• News concerning the coronavirus medicine remdesivir recently fuelled market optimism.
• US President Trump’s push to re-start the economy also challenges the pandemic fears.
• China’s GDP, Japanese Industrial Production decorate the Asian economic calendar.

While extending its recovery moves from 107.60, USD/JPY flashes 108.00 during the pre-Tokyo Asian session on Friday. The pair recently benefited from the market’s risk-on due to the update on the coronavirus (COVID-19) cure as well as US President Donald Trump’s push for the economic re-start.

The clinical trials concerning the Gilead Science’s remdesivir have been promising off-late.
“Gilead shares jumped by 9% after STAT news reported that a Chicago hospital is treating coronavirus patients with Remdesivir in a trial were recovering rapidly from severe symptoms,” said CNBC.

Following the news, S&P ETF surged 2.0% and the risk-on sentiment gained an additional boost from US President Donald Trump’s speech giving details of how the economy will be re-opened after the virus-led lockdowns. Also positive to the markets are the Republican leader’s expectations that the death toll will be fewer. It should also be noted that Reuters’ tally marked the single biggest daily increase in the US death numbers the previous day.

On Thursday, markets suffered from the coronavirus crisis as New York announced extended lockdown and Japan called for a national emergency. Also contributing to the risk-off were downbeat comments from the International Monetary Fund (IMF) citing no growth in Asia-Pacific for the first time in 60 years.

Although the current risk-on sentiment is likely to keep the USD/JPY on the front foot, traders will remain cautious ahead of the key China GDP data for the first quarter (Q1). The figures will be the key as markets will evaluate the epidemic’s impact on the world’s second-larger economy. Also crucial will be Japan’s Industrial Production data as well as any updates concerning the cure of the pandemic and/or virus outbreak.

Technical analysis

A sustained break of the three-week-old falling trend line pushes the USD/JPY pair towards a 200-day SMA level, currently near 108.35 while sellers will look for entry below the resistance-turned-support line figures of 107.60.