- USD/JPY fell in a risk-off environment, the trigger was the coronavirus.
- There was little merit for USD/JPY to be on the 110 handle, and 109.20s have now been marked.
USD/JPY has tumbled to print fresh lows since failing on the 110 handle, scoring 109.26 and meeting the 200-moving average on the four-hour chart. At the time of writing, the price is resting in the 109.40s having travelled from a high of 109.86 on the day.
The markets are risk-off, but the pair were struggling for too long in the 110s while US-JP spreads were also favouring a correction. The latest news, however, over the coronavirus, could be something to support prices within the 109 handle for longer considering that the World Health Organisation has just announced that it is too early to declare it as a public health emergency.
Meanwhile, with a focus in US stocks and the Federal Reserve interest rate meeting around the corner, the US dollar will now be the likely driver. That said this doesn't give much scope for an uberly bullish US dollar.
Fed in focus
Markets are certain of one thing, that the funds rate will be left unchanged considering how early on it is in the year and so soon following the Chinese/Sino trade deal without seeing what affect the December announcements of a deal have had on US businesses and sentiment, directly affecting the US economy and inflationary prospects. Therefore, the statement is also likely to be unchanged, or if there are any tweaks the should be minor.
"Policy will likely still described as "appropriate" but with officials also still in "monitor[ing]" mode, consistent with an easing bias,"
analysts at TD Securities explained.
On a bearish note, the analysts at TD Securities argued that the Fed meeting should still leave the USD the best of a bad lot but within tolerable ranges:
- "EURUSD lacks a directional macro impulse to offset negative carry dynamics. Tactically, we remain comfortable with our USDCAD long and bias for USDJPY to correct lower as its move to 110 was without merit."
- "We expect little market reaction to a Fed message of data dependence, but the market should continue to price in at least one rate cut in 2020 due to asymmetric risks."
USD/JPY levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.