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USD/JPY looks to post first daily close above 112 since April 2019

  • JPY struggles to find demand as a safe-haven despite sour mood.
  • US Dollar Index continues its climb toward 100.
  • Coming up: National CPI and All Industry Activity Index from Japan.

After rising above the 112 handle for the first time since April 2019 on Thursday, the USD/JPY fell to a session low of 111.70 but didn't have a difficult time turning north, once again. As of writing, the pair was up 0.65% on the day at 112.10.

Does risk aversion hurt JPY?

Although the poor performance of major global equity indexes and the US Treasury bond yields pointed out to a risk-averse market environment, the JPY failed to attract investors as a safe-haven. 

Consecutive disappointing macroeconomic data releases from Japan and the exposure of its economy to the coronavirus outbreak seem to be forcing the JPY to lose its haven status.

Explaining this change in markets' perception, "we would link the turnaround in the behaviour of the yen with three overlapping factors," Rabobank analysts said and explained:

"The first is that the impact of the coronavirus is very close to home, the second is the step-up in fears that Japan could fall into recession in the current quarter and the third is that the USD can offer both liquidity and yield. For these reasons the USD can offer many investors a more practical safe haven.”

On the other hand, the greenback preserves its strength against its rivals with the US Dollar Index stretching higher toward the critical 100 handle and allows the bullish momentum to remain intact. The data published by the Federal Reserve Bank of Philadelphia on Thursday showed that the economic activity in the regional manufacturing sector expanded at a robust pace to provide an additional boost to the USD.

During the early trading hours of the Asian session on Friday, National CPI and All Industry Activity Index data from Japan will be looked upon for fresh impetus. However, even if the data come in better than market expectations, the JPY's recovery against the greenback is likely to be short-lived in the current market environment.

Technical levels to watch for

USD/JPY

Overview
Today last price112.04
Today Daily Change0.80
Today Daily Change %0.72
Today daily open111.24
 
Trends
Daily SMA20109.55
Daily SMA50109.44
Daily SMA100109.02
Daily SMA200108.39
 
Levels
Previous Daily High111.59
Previous Daily Low109.85
Previous Weekly High110.14
Previous Weekly Low109.56
Previous Monthly High110.29
Previous Monthly Low107.65
Daily Fibonacci 38.2%110.93
Daily Fibonacci 61.8%110.51
Daily Pivot Point S1110.2
Daily Pivot Point S2109.15
Daily Pivot Point S3108.45
Daily Pivot Point R1111.94
Daily Pivot Point R2112.64
Daily Pivot Point R3113.69

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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