USD/JPY searches for firm direction to extend gains above 111.00
- USD/JPY struggles to extend a five-day winning streak.
- Fed offered unlimited QE, BOJ added to its JGB buying but nothing could help markets awaiting COVID-19 Bill.
- Preliminary PMI readings for March will also be important together with the coronavirus, stimulus news.
While probing the five-day winning streak, USD/JPY seesaws around 111.20/25 amid the early Tuesday morning in Asia. The yen pair seems to take clues from the comparative US dollar strength amid extensive Quantitative Easing (QE) from the BOJ and the Fed. Though, the US policymaker’s failure to agree over the Trump administration’s promised stimulus, coupled with rising coronavirus (COVID-19) numbers, seems to negatively affect the market’s risk-tone.
Fed/BOJ fail to renew trade sentiment as the US Senators disappoint…
Global markets failed to cheer the multibillion dollars worth of the QE by the central banks of the US and Japan. The reason could be traced from the US Senate where the policymakers failed to pass the much-awaited aid package earlier promised by President Donald Trump. Also contributing to the risk-off could be the spike in the US case of coronavirus beyond 41,000.
That said, the traders paid a little heed to the Chicago Fed National Activity Index, +0.16 versus downwardly revised -0.33 prior, as the figures range back ahead of the pandemic outbreak.
It should also be noted that as per Japanese media, the Asian nation is considered to announce entry barriers for US travelers while raising travel cautions to Germany and France. Furthermore, Nikkei mentioned that the Japanese government will cut its economic assesment and drop language describing the economy as recovery from the March monthly report. Elsewhere, Sankei came out with news that Japan is considering plans to delay Olympics by less than one year.
On the positive side, the US FDA offered the speedy run for potential COVID-19 treatments Remdesivir.
While portraying the risk-tone, Wall Street registered another daily negative closing, despite earlier run-up, whereas the US 10-year treasury yields dropped 15 basis points (bps) to 0.765% by the end of their trading on Monday.
Although the COVID-19 and stimulus headlines are likely to keep the driver seat, preliminary readings of the March much PMI figures will also offer short-term directions to the traders.
Technical Analysis
Sustained trading beyond 200-day SMA, currently near 108.30, coupled with a higher high formation on the daily chart keeps favoring the bulls targeting February month top near 112.25.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
