USD/JPY remains below 107.00 in search of fresh clues from Tokyo
- USD/JPY registers modest moves near the six-week low.
- Off in Japan, JPY’s safe-haven status failed to provide a major reaction to the Fed, risk-on sentiment.
- Japan’s March month data dump, virus updates on the watch-list.
USD/JPY drops to 106.58, down 0.10% on a day, ahead of the Tokyo open on Thursday. Even so, the pair stays near the lowest since March 17 while waiting for Japan open after Wednesday’s Showa Day bank holiday.
Risk-on sentiment questions bear despite broad US dollar weakness…
Despite flashing the six-day losing streak on Wednesday, the yen pair failed to cheer the broad US dollar weakness as antipodeans did. The reason could be traced from the Japanese currency’s safe-haven allure as well as off in Japan.
The Dollar Index, a gauge of the greenback’s strength against major currencies, registered losses for the fourth day in a row on Wednesday as downbeat US GDP and dovish pause by the Fed weighed on the US currency.
The preliminary reading of the US Q1 GDP slumped -4.8% versus -4.0% expected and +2.1% prior, marking it the sharpest fall since the initial Great Financial Crisis.
On the other hand, the Fed acknowledged that the world’s largest economy will have to bear the burden of the pandemic and that the policymakers stay ready to do whatever it takes.
Other than the US GDP and FOMC, news that the Gilead’s experimental coronavirus (COVID-19) drug, Remdesivir, offered promising results after disappointing amid the initial trials offered a boost to the market’s momentum.
The updates helped propel the risk-on sentiment that could be witnessed in upbeat performances by Wall Street and the US 10-year Treasury yields.
Also Read: US President Trump: Want to reopen country, it is much danger in being confined too much
Moving on, investors will wait for the full market return in Japan to react to the latest developments. Also likely to affect the yen moves will be Japan’s March month data dump including the preliminary readings of Industrial Production as well as Retail Trade. While the former is expected slump to -5.2% versus -0.3% prior on MoM, Retail Trade YoY may drop to -4.7% from the revised down prior figures of +1.6%.
Other than the economic docket, traders may want to keep eyes on the virus updates and drug news for fresh impulse.
Technical analysis
With its sustained trading below a horizontal support line, now resistance, comprising the early-month lows, near 106.90, USD/JPY becomes vulnerable to visit March 10 top surrounding 105.90.