USD/JPY: Coronavirus caseload rise is not just a US issue
|USD/JPY crashed through support at 106.00 last Monday and then took out 105.00 on Wednesday but comments from the Ministry of Finance on Friday and some sensible week-end and month-end profit-taking sent the pair racing higher. The dollar is set to recover its losses as the increase in Covid exposure and cases is inevitable in countries that reopen their economies, leveling the playfield with the US, FXStreet's analyst Joseph Trevisani briefs.
Key quotes
“The prior low of 106.00-106.10 which held from early March through Monday is the now the first resistance followed by 106.50, 106.75, 107.00, 107.25 and 107.50. The lines are close as that area was continually traversed from April through the end of July with tight trading ranges and multiple tops and bottoms.
“A Ministry of Finance (MOF) comment in Tokyo that ‘forex stability is important,’ standard code for the levels are of concern was later seconded by MOF head Taro Aso who noted that strength in the currency didn’t correspond with trade balance shifts.”
“As the incidence of the virus evens out the potential economic impact will also. What has been seen as a particular US problem for several weeks will become a generalized global issue. The differential extracted from the dollar for its nation’s supposed recklessness will reverse as the pandemic playing field tilts the other way.”
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