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  • USD/JPY fades recovery moves from 106.57 while stepping back from 106.92.
  • Global markets witness the sea of red amid economic and virus fears.
  • Japan’s Industrial Production for May will offer intermediate direction, qualitative catalysts will be the key.

USD/JPY fails to keep the pullback from one-month low while easing to 106.80 during Friday’s pre-Tokyo open trading in Asian markets. The yen pair prints five-day losing streak as risk aversion gained strength after the US Federal Reserve’s monetary policy meeting on Wednesday. Also increasing the fears were increasing coronavirus (COVID-19) numbers from some parts of the US as well as the Sino-American tension.

Fed Chair’s words matter a lot than the actions…

The Federal Open Market Committee (FOMC) turned down odds of negative rates and the Fed Chair Jerome Powell showed readiness to use unconventional policy measures to combat the virus if needed. Even so, the central banker’s fear of more job losses and a hint dimming prospects of a V-shaped recovery got major attention the previous day.

Additionally, the US and China remain at the loggerheads as China’s Global Times continues to criticize the Trump administration officials, including US President Donald Trump. In return, the US diplomats don’t step back from answering the calls as recently did by US Vice President Mike Pence. Furthermore, North Korea fired the latest shot against America alleging it to trigger more tension whereas China’s fight against Australia and the UK also offer background music to the risk aversion wave.

Amid all these catalysts, the US equity markets registered a heavy fall with key benchmarks like DJI30 and S&P 500 being the bears’ favorites. It’s worth mentioning that the US 10-year Treasury yields refreshed the monthly low under 0.70% amid market players’ rush to risk-safety.

Japan’s April month Industrial Production, expected to remain unchanged at -14.4% YoY, might offer immediate direction to the pair. However, nothing could be better than watching headlines from the US, China and also concerning the pandemic to forecast the quote’s near-term moves.

Technical analysis

April month’s low near 106.35 seems to offer immediate support to the pair ahead of May’s bottom surrounding 106.00. Meanwhile, buyers are less likely to enter unless noticing a daily close beyond 107.80/85 region comprising 21-day SMA and an ascending trend line from March 12.


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