- USD/JPY recovers from 106.95, four-day low, amid quiet markets.
- Risk-tone remains mildly heavy with S&P 500 Futures losing 0.20% amid coronavirus fears.
- Qualitative risk catalysts will be the key for immediate direction amid a lack of major data from Japan in Asia.
USD/JPY bounces off 106.95 to 107.04 during the pre-Tokyo Asian session on Thursday. In doing so, the pair refrains from following the previous three-day fall. The reason could be traced from the US dollar’s recovery amid higher safe-haven demand backed by the downbeat updates relating to the coronavirus (COVID-19).
No relief from the virus…
Despite the upbeat results of the UK’s second vaccine trials, the global markets failed to get any relief from the deadly virus wave 2.0. Updates from the US and Beijing, not to forget Japan, have recently been downbeat. Texas recorded a jump in the hospitalization whereas Florida, Arizona and Oklahoma also joined the line off-late. On the other hand, Japan’s virus figures surged to the highest since May 30 and Beijing is trying, by all means, to tame the deadly disease from spreading.
Other than the pandemic fears, geopolitical tension between North and South Korea, as well as between India and China, also add a burden on the market’s risk-tone sentiment.
As a result, Wall Street marked losses, though mildly, whereas the US 10-year Treasury yields also followed the suit while closing around 0.73% on Wednesday. Further, S&P 500 Futures follows the footsteps of the US benchmarks and drop 0.20% to 3,100 by the press time.
It should also be noted that the recent comments from Cleveland Federal Reserve President Loretta Mester and US Trade Representative (USTR) Robert Lighthizer failed to offer any major market moves despite being mostly positive.
Furthermore, the USD/JPY pair also seems to pay a little heed to the Japanese government’s upward revision to the June month economic assessment.
Looking forward, a lack of any strong economic data/events scheduled for publishing today, USD/JPY traders may keep eyes on the virus updates, as well as the geopolitical news, for fresh impulse. However, the US data might offer additional clues during the later part of the day.
Technical analysis
Unless breaking a confluence of 21 and 50-day SMA, near 107.60/70, odds of the pair’s drop to the monthly low near 106.60 can’t be ruled out.
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