- USD/JPY remains on the back foot after Friday’s U-turn from the 10-month’s top.
- Rising cases of coronavirus outside China, especially in Europe, has been the major concern off-late.
- Chinese President, WHO keeps trying to placate traders but failed to boost trade sentiment.
- Off in Japan could keep traders searching coronavirus headlines for fresh impulse.
USD/JPY declines to 111.45, with the intra-day low of 111.28, amid the initial Asian session on Monday. That said, the pair stays under pressure as coronavirus pushes traders towards risk-safety whereas the pullback in the US dollar after Friday’s US PMI exerts additional downside pressure on the quote.
Read: What you need to know for the open: Coronavirus risk-off themes rule the waves
Another recession?
The fourth quarter (Q4) GDP figures renewed worries of recession inside the world’s third-largest economy while the fact that Japan is the biggest victim of coronavirus outside China (while counting cases of the Diamond Princess cruise) also keeps USD/JPY traders worried.
As per the latest numbers, there have been a total of 738 infected cases and 3 deaths (including 639 cases on Diamond Princess cruise ship and 99 on land).
China contributed nearly 19% of the total Japanese exports during 2019 and a deadly virus outbreak there could have a larger blow to the lingering economy that recently registered Q4 GDP as -1.6%.
Xi, the WHO fail to placate traders…
China’s President Xi Jinping and the World Health Organization (WHO) continues to try to placate traders but gained no sympathy as the increase in corona cases from Italy triggered fears that the bloc is under danger. The latest comments from the WHO suggest that no new countries reported coronavirus cases in the past 24 hours whereas Chinese President Xi Jinping mentioned that efforts to control coronavirus have reached a critical stage.
Read: G20 Summary: Top economies coordinated response to the coronavirus outbreak
Looking forward, Japanese markets are off today due to the Emperor’s Birthday and hence traders will keep eyes on the coronavirus updates for near-term direction. However, the pair is likely to remain under pressure following Friday’s pullback in the US dollar after marking mixed PMI data.
Technical Analysis
FXStreet’s Ross J Burland mentions that the quote is nearing a familiar territory while spotting the monthly chart:
The 2015-2020 downtrend has been taken put and bulls are controlling with a weekly close above 110.31. Bulls can target a run beyond 112.50s for a move towards 114.55, 2018 high.
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