USD/JPY retraces losses above 107.00 as trade/virus fears loom

USD/JPY consolidates the previous day’s fall while bouncing off 107.12 to 107.20 ahead of Wednesday’s Tokyo open. Even so, the pair stays pressured amid the on-going risk aversion backed by the fears of a full-fledged trade war and wave 2.0 of the coronavirus (COVID-19).

Trade, virus headlines keep the risks heavy…

Not only the US-China trade tussles but the recent ban on Aussie meat exports to China also speaks louder for the trade wars. Everybody doubts the dragon nation’s safe play that the action on Australian meat producers doesn’t have any links to the Aussie PM’s favor for an enquiry into China’s role in virus outbreak.

Elsewhere, the virus cases tripled in Germany and the epicenter Wuhan also registered a fresh rise in the numbers after slowly getting back to the work. Additionally, an ex-member of the White House Coronavirus Task Force Team, Doctor Anthony Fauci warned over the US wish to gradually restart while saying that this could cause needless suffering and set the economic recovery back.

Furthermore, the BOJ officials also cite the downbeat impacts of the virus on the Asian economy and showed readiness to act as and when needed.

Amid all these catalysts, S&P 500 Futures register 0.22% gains to 2,846 after US equity benchmarks ended sharply lower on Wall Street.

Looking forward, Japan’s Currently Account and Trade Balance – BOP Basis figures will kick-start the busy data comprising a speech by the Fed Chair Jerome Powell. Additionally, trade and virus updates will remain as key drivers.

Technical analysis

Buyers will look for entry beyond a 50-day EMA level of 107.75 to target a move beyond mid-April top near 108.10. Until then, a 10-day EMA level of 107.00 offers immediate support to the pair ahead of the monthly bottom close to 106.00.