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USD/JPY consolidates two-day gains to sub-108.00 area amid risk reset

  • USD/JPY snaps a two-day winning streak with the recent pullback moves.
  • The US Senate passes a $484 billion package, major oil producers signal efforts to tame the rout.
  • US President Trump will sign executive order to ban immigration into the US for 60 days on Wednesday.
  • Coronavirus data suggest the curve is flattening, 20 states in the US are readying for reopening.

While taking clues from the recently upbeat catalysts from the US, USD/JPY remains mildly positive, but consolidates gains, around 107.80, during the pre-Tokyo open on Wednesday.

Trump administration tries to placate traders…

Be it US President Donald Trump or Treasury Secretary Steve Mnuchin, not to forget the response coordinator for the coronavirus (COVID-19) task force Deborah Leah Birx, all of the US diplomats recently tried to placate traders after Tuesday’s worrying markets.

The US President Trump cited 20 states’ readiness to reopen to please the markets but couldn’t stop progressing from a 60-day ban on immigration, likely signed on Wednesday.

Treasury Secretary Mnuchin raised concerns for the oil price performance and said to look for options whereas the COVID-19 response coordinator signaled recoveries in data from the major cities including Chicago and New York.

Further to brighten the mood, the US Senate passes a $484 billion coronavirus relief package bill and the same is more likely to be approved by the House by Thursday.

Even so, Reuters suggests that there are over 45,000 deaths in the US, due to the pandemic, by Monday, while also citing failures of the drug championed by US President Trump to combat the pandemic.

It should be noted that the global markets portrayed risk-off and favored the US dollar the previous day. Also worth knowing is the BOJ’s warning, conveyed via Reuters, that if the coronavirus pandemic is prolonged, it could destabilize the Japanese financial system.

Amid all these catalysts, Wall Street and the US bonds marked losses on Tuesday before the S&P 500 Futures, up 0.30% to 2,740, trying to portray the risk reset.

Given the lack of major data, traders will keep eyes on the oil price performance, as well as the US efforts to combat the pandemic.

Technical analysis

A daily close beyond 200-day SMA level of 108.35 becomes necessary for the bulls to regain the throne. However, sellers are less likely to attack unless USD/JPY prices refresh the monthly low beneath 106.90.


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