- Resurgent USD demand assisted USD/JPY to reverse an early dip to sub-107.00 levels.
- Wednesday’s awful US retail sales data added to worries about the coronavirus crisis.
- The prevailing risk-off mood warrants some caution before placing fresh bullish bets.
The USD buying interest picked up some additional pace in the last hour and lifted the USD/JPY pair to fresh daily tops, around the 107.60 region post-US macro data.
Having shown some resilience below the 107.00 round-figure mark, the pair caught some fresh bids on Wednesday and staged a goodish rebound from monthly lows support. A strong pickup in the US dollar demand was seen as one of the key factors behind the pair’s intraday recovery from two-week lows.
Despite the latest optimism over a steady trend down in the new coronavirus cases and deaths across the world, investors remain concerned over the economic fallout from the pandemic. The market worries were further fueled by the latest US monthly retails sales, which plunged by 8.7% in March.
This comes after the International Monetary Fund (IMF) on Tuesday said that the COVID-19 pandemic could cause the world economy to shrink by 3% in 2020, the biggest collapse since the Great Depression. This eventually provided a strong boost to the USD’s status as the global reserve currency.
The latest developments dented investors’ appetite for perceived riskier assets and the same was evident from a sea of red across the global equity markets. The safe-haven Japanese yen benefitted from the prevailing risk-off mood and seemed to be the only factor that might keep a lid on any further gains.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the recent slide might be over or positioning for any meaningful near-term appreciating move.
Technical levels to watch
Share
