Search ForexCrunch
  • USD/JPY fails to hold onto recovery gains as trade sentiment turns weak.
  • Coronavirus in all of the US, Japanese firms’ concerns renew fresh risk-off.
  • Fed’s salvo, downbeat comments from US Treasury Secretary and Japanese trade numbers also weigh on the pair.
  • Global policymakers’ fight against the coronavirus will be the key catalyst.

Taking clues from the recent risk catalysts, USD/JPY drops to 107.40 as the Tokyo session kick-starts for trading on Wednesday. Despite the Fed’s sustained action mode, downbeat comments from the US policymakers as well as pessimism among Japanese firms, not to forget upbeat trade data from Japan, weigh on the pair.

The US Federal Reserve just announced another step, a short-term credit line to primary traders, to ward off the negative implications of the coronavirus (COVID-19). However, the US virus plan anticipates widespread shortages and an 18-month pandemic while also citing the outbreak in all 50 nations and the DC renewed risk-off. Also increasing the fears were comments from the US Treasury Secretary Steve Mnuchin that Coronavirus outbreak could push unemployment up to 20% without action.

On the flip side, a corporate survey from Reuters revealed that 47% of Japanese firms convey disturbance to the supply chain due to the virus outbreak.

However, the news that Joe Biden wins Florida primary and inches closer to the US Presidential nomination recede the fears a bit.

That said, the US 10-year treasury yields are four basis points up to 1.044% whereas Japan’s NIKKEI mark 1.7% gains to 17,330 by the press time.

The economic calendar also helped to limit the pair’s previous day’s recovery moves as Japan’s February month Trade Balance grew beyond ¥917.2 B to ¥1109.8 B. Further details suggest, Imports and Exports also marked better numbers than -14.4% and -4.3% forecasts to -14% and -1% respectively.

Considering the lack of major data on the economic calendar, investors will take clues from the global fight against the pandemic.

Technical Analysis

10-day SMA near 105.70 offers immediate support while a confluence of 50-day and 100-day SMAs near 108.85/90 becomes the tough upside barrier to watch.