USD/JPY grinds near three-week low to sub-109.00 as coronavirus weigh on sentiment

• USD/JPY registers eight-day losing streak.
• Fears of China’s coronavirus outbreak negatively affect the market’s risk-tone, the US 10-year treasury yields and Wall Street.
• A little heavier economic calendar in the US session but nothing major during Asia.

USD/JPY drops to 108.90 at the start of Tuesday’s Asian session. In doing so, the pair tests the lowest since January 08 while also flashing losses for the eighth day in a row. Concerns surrounding China’s coronavirus have recently smashed trade sentiment exactly when the global investors were started taking a sigh of relief. The US data came in mixed whereas tensions in the Middle East also weighed on the market’s performance.

Coronavirus and the Middle East fire the risk-off with double-barrel…

The Hill came out with the news, quoting China’s health officials, saying that the Coronavirus could be much more contagious than previously thought. The fatal virus has so far claimed nearly 100 lives and is likely to have infected more than 30, 000 inside China. The US has officially advised not to travel China, avoid Hubei, to travelers whereas policymakers in the dragon nation are grappling with the contagion, banning travels and extend the Lunar New Year break.

Elsewhere, diplomats at the US and Iran ignore Iraq’s peace calls as Iran prepares for a satellite while Trump administration joins hand with France to make Tehran act like a normal country.

Also favoring the risk-off could be the uncertainty surrounding the post-Brexit trade talks between the UK and the European Union (EU). The regional leaders keep their heads high whereas the British diplomats are also not in a mood to respect their old neighbors after getting the public support in the latest general election.

While portraying the market’s fear, the US 10-year treasury yields drop to the lowest since October 09, with a low of 1.598%, whereas leading US equity benchmarks also drop by the press time. Among them, S&P 500 lost 50.93 points or 1.55% to 3,244.54 whereas Dow Jones Industrial Average (DJIA) dipped 447.71 points, -1.54%, to 28,542.02 by the end of Monday’s trading session. Further, Nasdaq also dropped 173.85 points Or 1.87% to 9,141.06.

Given the current market sentiment moving against the risk-taking, mainly based on the events surrounding China and the Middle East, traders might pay a little attention to the economic calendar that has no major events/data scheduled for publishing. Even so, the US session could grab the traders’ attention back to the calendar as it will offer December month Durable Goods Orders, Richmond Fed Manufacturing and Consumer Confidence figures.

Technical Analysis

Despite breaking below 50-day SMA level of 109.20, USD/JPY prices are still beyond 100 and 200-day SMAs near 108.70 and 108.45 respectively. With this, prices are likely to witness a pullback before declining further.