- USD/JPY recently witnessed difficulties in extending the previous day’s recoveries.
- US policymakers tried to sound positive without President Trump.
- COVID-19 headlines will be the key.
Having failed to take-out 106.00, USD/JPY drops to 105.35 amid the initial Asian session on Wednesday. The pair recently witnessed downside pressure following the US Coronavirus (COVID-19) Task Force Briefings while the earlier recovery could be traced to US President Donald Trump’s signals for ‘major’ economic response to the disease.
The US policymakers appeared without President Trump on the stage of Coronavirus Task Force Briefings. Vice President Mike Pence reiterated the messages already known, including the insurance companies’ readiness to pay for the coronavirus-led damages as well as Trump’s efforts to offer Payroll Tax relief.
Read: US COVID-19 Task Force Presser: Costs will be covered by US health insurance industry for those contracted the virus
Following this, the trading sentiment seems to have dimmed in its earlier optimism relating to the US response to the deadly virus. However, calls of the efforts from the rest of the global economies stay on the cards, including the US, which in turn shows the policymakers’ readiness to confront pandemic and help overcome it.
Risk tone recovered by the end of Tuesday with the Treasuries bouncing off record lows and the US equities flashing green signals. Also showing the market’s positive mood was the support for the US dollar that recovered its losses piled on Friday and Monday following US President’s signal for ‘major’ response to the coronavirus.
While the Japanese economic calendar is mostly empty, the Asian nation’s upbeat sentiment to not postpone Tokyo Olympics and announce the second stimulus seem to push investors towards more details for fresh clues.
On the other hand, the US Consumer Price Index data for February will be all-important to follow during the later part of the day. “The overall CPI was likely held down by a gasoline-led drop in the energy component. We see a close call between our 0.1% m/m forecast and 0.0% m/m after rounding,” said TD Securities.
Despite marking a noticeable bounce from Monday’s low, the pair stays below a two-week-old falling trend line, currently at 105.65, which in turn increases the odds of the pair’s fresh declines to 105.00 and 104.30.