USD/JPY: Pressured for third consecutive day towards 105.00 despite stimulus from Japan
|- USD/JPY remains depressed near the lowest since Friday.
- Japanese Finance Minister Taro Aso announced 1.1372 trillion emergency relief package to battle the coronavirus.
- Risks remain positive amid hopes of US stimulus, receding virus woes and trade optimism.
USD/JPY stands on a slippery ground while refreshing intraday low to 105.15, down 0.03%, as markets in Tokyo open for Tuesday’s trading. In doing so, the yen pair drops for the third day in a raw even as Japanese Prime Minister Taro Aso recently unveiled additional stimulus to combat the coronavirus (COVID-19) at home.
In his comments, Japanese FM Aso said, Cabinet decided on Tuesday to spend 1.1372 trillion yen in emergency reserves for measures to cope with coronavirus.
Read: Aso: 1.1372 trln yen affored to cope with coronavirus
USD/JPY bears seem to take clues from the latest US dollar weakness while marking the fresh downside. The US dollar index (DXY) remains on the back foot, currently below 91.00, following its pullback on Friday from the highest in two months.
Although the risk-on mood hasn’t faded, mainly backed by the hopes of the US covid relief package, jump in the US 10-year Treasury yields seem to favor the greenback sellers off-late. Recent updates concerning the US aid package unveil comments from the House Republican leader Mitch McConnel mentioning that Democratic decision to go ahead with covid stimulus alone.
That said, optimism concerning the reduction in the trade jitters among developed world countries like Europe, the UK, the US and Australia join the reduction in the COVID-19 figures to favor the market optimists. “Tokyo confirmed 276 new coronavirus cases Monday, marking the lowest daily infections in more than two months under an extended state of emergency in the capital and other areas,” said the Kyodo News from Japan.
Amid these plays, Japan’s Nikkei 225 gains 0.15% whereas the S&P 500 Futures wavers around a record top of 3,911 by the press time.
Given the risk-on mood, the US dollar is likely to witness further weakness and hence the USD/JPY may have some more room on the south. However, a light calendar restricts the pair’s immediate moves.
Technical analysis
Failures to cross 200-day SMA, at 105.55 now, direct USD/JPY traders towards the early January high of 104.40.
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