USD/JPY drops below 107.00 as US-China tussle heavy the risks
|- USD/JPY extends Friday’s losses amid risk-off sentiment.
- US diplomats allege China for the mishandling of the virus.
- Good news on virus drug fails to tame the trade-war fears.
- Japanese banks are off due to the Greenery Day, qualitative catalysts will be the key in Asia.
While carrying Friday’s losses forward, USD/JPY drops to 106.84 amid the early Monday morning in Asia. Even if the US dollar registered gains again major counterparts amid risk-off, mainly due to the US-China tension, the greenback seems to step back against the Japanese yen’s safe-haven allure.
Read: What you need to know as markets open: Pompeo and Trump ratcheted up US and China tensions
Trade war fears become an additional burden…
While the global markets are still struggling to find a cure for the coronavirus (COVID) pandemic, the US-China tension adds a burden to the risk-tone.
The US diplomats said to, as per the AP, rely on the Intelligence reports to allege China for intentional mishandling of the virus outbreak.
Although Chinese dailies tried to turn down the allegations on Friday, there hasn’t been any update so far, which in turn makes the world doubt the dragon nation’s role in the virus outbreak.
The US has already warned to use harsh tariffs and the global economies might also dislike the Asian major if the nation becomes guilty. Though, until the final decision, which might never arrive, the war of words between the world’s two largest economies can keep weighing on the global risk-tone sentiment.
The tussle becomes severe especially when the macro markets are yet to find a footing off the virus-less losses.
On the contrary, news that the Gilead’s Remdesivir will be available to the virus patients this week should be considered for the risks.
However, market players seem to pay more attention to the trade stories and the rejuvenation of the US-China tussle, which in turn could keep the risks heavy.
Hence, any more deterioration of the US-China trade relations, which is more likely, could keep weighing on the market’s trading sentiment amid a lack of major data/events as well as off in Japan.
Technical analysis
Friday’s Bearish ‘Spinning Top’ candlestick on the daily chart seems to keep the pair below the monthly resistance line, currently near 107.45/50. As a result, bears targeting March 10 top near 105.90 remain hopeful.
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