USD/JPY refreshes session top to 111.50 as US policymakers agree on COVID-19 bill

• USD/JPY remains on the front foot after the much-awaited news from the US fuelled risk-on tone.
• Investors now await the voting on the $2 trillion stimulus package.
• Coronavirus news, US data are additional catalysts to watch.

The risk-on tone got a boost after the Senate Majority Leader Mitch McConnell announced the agreement over the much-awaited coronavirus (COVID-19) aid package from the US. That said, the USD/JPY pair extended the recent recovery to 111.485, currently near 111.38, by the press time of early Wednesday.

After two days of turning it down, Senate Democrats and Republicans finally agreed over the Trump administration-backed stimulus plan. Odds concerning the nearness to the announcement have earlier helped the market’s trade sentiment off-late.

While portraying the market sentiment, US 10-year treasury yields rose four basis points (bps) to 0.853% whereas the US stock futures also trimmed earlier losses, not to forget mentioning positive prints of the Asian stocks.

Investors now await details of the voting as well as the terms of the package for further direction. However, the US Durable Goods Orders for January and additional coronavirus headlines from the nation could provide fresh impulse.

Recently the World Health Organization (WHO) spokeswoman Margaret Harris warned that the pace of acceleration in the number of new coronavirus infections in the US will likely make it the new epicenter of the pandemic.

Concerning the data, analysts at TD Securities said that the details of the durable goods report will probably be weaker than the headline data, most notably in the ex-transportation and core capex parts. "Indeed, we project the latter to have declined by 0.5% and 1% m/m, respectively, while headline durable goods orders likely expanded 1% m/m in Feb. The March data are likely to be much weaker, similar to the pattern in most reports."

Technical analysis

USD/JPY defies the previous day’s Bearish Doji candlestick formation while targeting the February month high around 112.25. Though, a sustained break of the previous day, near 111.75, becomes necessary. Alternatively, 200-day SMA close to 108.30 acts as the near-term key support.