USD/JPY fills Monday's negative gap
|- USD/JPY has filled the gap created by Monday's negative open.
- Coronavirus fears have subsided in the last 24 hours, allowing recovery in USD/JPY.
- The respite could be short-lived if the Fed sounds dovish, sending the US dollar lower.
USD/JPY jumped above 109.17 in the overnight trade, filling the gap created by Monday's weak open at 108.89.
The pair had gapped lower on Monday as the anti-risk Japanese yen attracted haven flows on concerns the coronavirus outbreak in China may turn into a pandemic, derailing the global growth recovery.
The downside in USD/JPY, however, ran out of steam 108.73 on the same day and the pair bounced back above 109.00 on Tuesday, tracking the risk reset in the US stocks. The upbeat US data releases – Durable Goods Orders and Richmond Fed Manufacturing – likely added to the bullish tone around the US dollar.
The overnight gains were extended further to 109.27 in early Asia as Bank of Japan's minutes reiterated dovish bias.
At press time, the pair is trading at 109.20. A convincing move above 109.27 could still happen as the futures on the S&P 500 are reporting a 0.24% gain.
The pair, however, could slide below 108.73 if the Federal Reserve sounds dovish reviving expectations for interest rate cuts in 2020.
Technical levels
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