• USD/JPY snaps two-day drop amid mixed sentiment.
  • US President Trump’s blame-game failed to get verification, virus antibody adds strength to risk reset.
  • Japanese banks are off for Children's Day.

Following its bounce from 106.60, USD/JPY seesaws around 106.75 during the early Tuesday morning in Asia. That said, the pair registered losses during the previous two days as risk-off sentiment gained support from the US.

In addition to alleging that researches in China’s Wuhan laboratory were the cause of the coronavirus (COVID-19) outbreak, US President Donald Trump also flashed trade war signals off-late. The Republican leader’s comments challenging the US-China trade deal were the latest catalysts to the market’s risk-tone.

However, the World Health Organization (WHO) defied any such claims by saying it didn’t receive any such proof from the US. The news paused the previous risk-off sentiment.

Also challenging the mood was an update from the Sky News that reads, "Scientists have discovered an antibody which prevents the coronavirus from infecting human cells in ‘groundbreaking research’ which could lead to the development of new treatments.”

Additionally, Reuters tally suggesting a drop in the rate of virus-led fatalities have also helped to portray the risk reset.

As a result, Wall Street managed to close Monday’s trading session on the positive side, despite initial losses, whereas S&P 500 Futures flash mild gains amid the first few minutes.

Given the Golden Week holiday period in Japan, US Treasury yields may be less volatile and so does the USD/JPY pair. However, updates concerning the virus and US-China trade war could keep the markets active.

Technical analysis

An eight-day-old falling trend line near 107.20 restricts the pair’s immediate recoveries ahead of 21-day SMA around 107.60. As a result, sellers can keep targeting April lows near 106.35 during the further downside.

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