- USD/JPY retreats from the 13-day top.
- BOJ Summary of Opinions printed downbeat economic scenario, policymakers ready for action.
- Calls of removing virus-led restrictions also dominate in Japan.
- US President keeps his dislike for China, refrains to reopen phase 1 trade deal.
USD/JPY bulls catch a breath around 107.65 during the early Asian morning on Tuesday. That said, the pair rose to the 13-day top of 107.77 the previous day amid broad US dollar strength backed by fears of the coronavirus (COVID-19) return as well as a light calendar.
US-China trade deal remains elusive…
Despite creating much hype during the recent years, the US and China are far from any clear trade deal amid the age-old differences between the two global powerhouses. With the virus outbreak helping US President Donald Trump to amplify his tough stand against the Asian nation, his recent comments straight away turn down the odds to reopen the phase 1 terms for China.
Late last week, the US and Chinese trade diplomats agreed upon communication and cooperation, per Xinhua, but nothing major could be found, except for indirect warnings, afterward.
Fears of virus resurgence check the optimism…
While major economies are again filling their tanks for getting back to work after the virus-led lockdowns/restrictions, fears of a resurgence, as cited from the epicenter Wuhan as well as Germany, check the optimists.
Also, downbeat economic view in the BOJ’s Summary of Opinions, published Monday, coupled with an earthquake in Tokyo, added strength to the pair’s upside the previous day.
Amid all these plays, risk-tone remains mixed with Wall Street benchmarks struggling for a clear direction whereas the US 10-year Treasury yields cross 0.70% mark with the gains of 2.6 basis points (bps).
While the Preliminary reading of Japan’s Leading Economic Index for March, expected 91.9 versus 91.7 prior, acts as the economic catalyst, trade/virus updates will also be watched for fresh impetus.
Despite flashing a multi-day high, 50-day EMA, near 107.80 now, acts as the immediate upside barrier to cross for the pair. A sustained break above 107.80 will help the pair to aim for a 100-day and 200-day EMA level of 108.18 and 108.52 respectively. On the downside, a 21-day EMA level of 107.25 limits the pair’s short-term declines.