USD/JPY trades at 20-day highs above 109

• US Dollar Index climbs to highest level since March 2017.
• Selling pressure on global stock indexes softens modestly on Thursday.
• Coming up: Weekly Initial Jobless Claims and Philly Fed Manufacturing Index from US.

The USD/JPY pair gained 100 pips on Wednesday and continued to push higher on Thursday as the broad-based USD strength continues to dominate the foreign exchange market. As of writing, the pair was trading at its highest level since February 28th at 109.28, adding 1.12% on a daily basis.

DXY closes in on 102

Concerns over a long-lasting USD funding shortage amid the negative impact of the coronavirus outbreak on the global economy boost the demand for the greenback. The US Dollar Index (DXY), which added more than 3% since the start of the week, is now at its highest level since March 2017 at 101.90, up nearly 1% on the day.

Although it’s usually a low-tier data, investors will be paying close attention to the weekly Initial Jobless Claims figures from the US to see if the coronavirus outbreak is already causing people to lose their jobs. The Reserve Bank of Philadelphia’s Manufacturing Survey will be featured in the US economic docket as well. 

In the meantime, the unabated selling pressure surrounding the risk-sensitive global equity indexes seems to have softened on Thursday with the Euro Stoxx 50 index posting small daily gains and making it difficult for the JPY to capitalize on risk-off flows.

Technical levels tow watch for