USD/JPY off lows, still in the red below 109.00 mark
|- USD/JPY meets with some supply on Tuesday amid a modest USD pullback.
- Improving risk sentiment undermined the JPY and helped limit the downside.
The USD/JPY pair held on to its weaker tone through the early European session, albeit has managed to rebound around 20-30 pips from daily lows.
The pair met with some fresh supply on Tuesday and for now, seems to have snapped three consecutive days of winning streak amid a modest US dollar pullback. However, a combination of factors helped limit any deeper losses, rather assisted the pair to find some support ahead of the very important 200-day SMA.
The slowing number of new coronavirus cases in the European hotspots – Italy and Spain – and the centre of the US outbreak – New York –indicated that the pandemic may be reaching its peak. The latest optimism led to a strong recovery the global risk sentiment and dented the Japanese yen's safe-haven status.
The risk-on mood was reinforced by some follow-through pickup in the US Treasury bond yields. This coupled with the fact that the Japanese government is preparing to declare a state of emergency for Tokyo and other big cities further weighed on the JPY, which was also seen as a factor helping limit the downside.
Meanwhile, persistent worries over the economic fallout from the coronavirus pandemic might continue to benefit the greenback's status as the global reserve currency. This should eventually prompt some dip-buying and thus, warrant some caution before positioning for an extension of the intraday slide.
Currently hovering around the 108.85-90 region, developments surrounding the coronavirus might continue to influence the pair's momentum and produce some meaningful trading opportunities amid absent relevant market-moving economic releases on Tuesday.
Technical levels to watch
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