Traders piled back into risky assets on Tuesday, with US equity indices rising circa 1%, which also helped to lift the USDJPY pair. It traded 0.25% stronger during the late US session, hovering at around 109.15.
Markets across the world stabilized today as the head of the World Health Organisation said he was confident in China's ability to contain the virus outbreak that has killed 106 people, prompted businesses to close operations and curbed travel.
Moreover, US durable goods orders improved notably in December and printed 2.4% month-on-month (from -3.1% in November), but the core indicator continued to be weak at -0.1% (versus -0.4% previously) and the indicator excluding air orders declined notably to -0.9% from 0.1% in the previous month.
It looks like the pair is trying to close the bearish gap from yesterday's open. The closing price on Friday was near 109.25, so it only needs a couple of pips to close this bearish gap. Thus, this is the first target for bulls.
Should the situation regarding the coronavirus outbreak get under control (hopefully very soon), the risk-on money flows might push the pair toward the key resistance of 110.00.
On the other hand, if the situation worsens further, we could see more selling from the mentioned 109.25 resistance, with the first target near this week's lows of 108.70.
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