USD/JPY trading heavy in a risk-off environment, bulls heads to be sliced off

• USD/JPY remains better offered and a fade on rallies as COVID-19 uncertainty weighs. 
• USD/JPY holding on to the 107 handle by the skin of its teeth.

USD/JPY pushed above 108.60 then rolled over to 107.25 before popping in Tokyo as the US dollar picks up the pace through Asia. At the time of writing, USD/JPY is trading at 107.48 having travelled from a low of 107.25 and a high of 107.76. 

COVID-19 crisis remains fluid, yen picking up the bid

The COVID-19 crisis is fluid and bouts of risk on are swept up by the bears making for a sell on rallies in a broad downtrend in USD/JPY and equities. The US President Trump was raising the prospects of bringing back a major infrastructure package or some $2trn within the next relief bill while the Democratic House Speaker,  Nancy Pelosi, also stated that the US should start developing and debating the fourth stimulus bill. However, the stimulus plug did little to spur the markets along, swapped in fear and uncertainty.  On Wall Street, the benchmarks closed in the red, ending a volatile quarter – more on that here: Wall Street Close: Benchmarks tumble into manic quarter's end

Meanwhile, sticking the theme of stimulus, the US Federal Reserve announced a special repo facility to allow international monetary authorities to access USDs via repurchase agreements for their US treasury holdings, aimed at avoiding both a squeeze on USDs and forced US Treasury sales. This should continue to ease up the bullish pressure on the US dollar and potentially move the ball into the bear's court in USD/JPY as risk-off flows continue to dominate. 

• BoJ Gov Kuroda: If inflation nears 2%, BoJ will need to adjust monetary policy to stabilise prices

Elsewhere, the G20 finance ministers and central bankers’ conference call failed to come up with any meaningful conclusions other than committing to prior commitments to respond to COVID-19 and a further meeting on 15 April which keeps the uncertainty rampant in the financial and commodities markets. 

Data was a focus again, and it was not pretty in the US. Analysts at ANZ Bank explained:

• Down: The US Conference Board Consumer Confidence Index fell to 120.0 in March from 132.6 in February. The expectations index – based on the short-term outlook for income, business and labour market conditions – slumped to 88.2 in March from 108.1, but the present-situation data fell only slightly.
• Down: The Chicago PMI fell to 47.8 in March, down from 49.0 in February, but the fall was not quite as large as expected. Production and new orders fell, while supplier deliveries gained due to stock-piling behaviour.
• Down: Inflation in the euro area fell to 0.7% y/y in March – its lowest rate since October. Energy costs fell sharply (-4.3%) while food prices increased, running at 2.4% vs 2.1% the previous month.

As for the Japanese latest economic updates, things are not much better:

• BoJ March Tankan: Big Manufacturers index -8 (Reuters poll: -10)

USD/JPY levels