USD/JPY trdes below 111, bears heave eyes on 110.40

  • USD/JPY sliding below 111 handle to trendline support.
  • Eyes on 110.40 to volume point of control.
  • US Congress in focus, can a deal get done for the US nation?
  • Tokyo on lockdown, COVID-19 cases jump. 

USD/JPY is trading back below 111 as we moved through Asia and the mood shifts surrounding the US Congress’s inability to come together and agree on a stimulus plan and get it to US individuals and companies. At the time of writing, USD/JPY is trading at 110.86 having travelled from a high of 111.30 to a low of 110.82. 

USD/JPY is testing trend-line support on a short term basis where a break at this juncture opens risk to a fast run to 110.40 according to a 15-minute volume profile analysis. The fundamentals support a stronger yen for its safe-haven qualities while the US dollar has started to lose its appeal as it drifts away below the 101 handle in the DXY, perhaps due to a combination of rising cases of COVID-19 in the US, losing dollar liquidity following the Federal Reserve’s QE programme and a drive-by a syndicate of global banks to free up USD swap lines. 

US Congress moving towards approving a $2.2 trillion, but…

A major theme that has been at the centre of Wall Street’s performance has been US Congress moving towards approving a $2.2 trillion stimulus emergency relief package that was designed to flood the US economy with money, as households and businesses continue to reel from the COVID-19 outbreak. Global stock markets cheered what looked to be all set, with US stocks rising for the best part of the day. However, shortly after announcing the deal, Senate leaders encountered various hurdles as they tried to write the bill’s fine print in the latest twist for the spending legislation. This weighed on risk sentiment into the Wall Street close and appears to be dragging on markets in Asia on Thursday as well. Rumour has it that there may be a US Senate vote soon on the coronavirus relief bill.

COVID-19 cases jump in Tokyo

In earlier news, there was a jump in cases in Tokyo and a lock-down has been warned for the city.

  • Tokyo governor Koike: says holding talks with leaders in surrounding prefectures on possible ways to curb flow of people into Tokyo.
  • Tokyo governor: May need to consider lockdown if we don’t take moves to slow infections and infections continue to rise at this pace.

USD/JPY levels 

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