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USD/JPY: Mildly bid above 109.00 amid cautious optimism, eyes on coronavirus, FOMC

  • USD/JPY remains on the road to recovery.
  • Mixed clues from China keep the risk-tone directionless and fragile.
  • Fed isn’t expected to alter monetary policy but the Chair’s press conference will be the key.

USD/JPY keeps the range between 109.00 and 109.30, currently declining to 109.12, as Wednesday’s Tokyo session starts. In doing so, the quote remains mildly positive amid mixed headlines from China. Though, traders are also gearing up for today’s FOMC and might have waited for the event release before taking big trading decisions.

BOJ’s Summary of Opinions reiterates the bearish bias…

In its Summary of Opinions concerning the latest January month’s meeting, the Bank of Japan said it must maintain easy policy bias as must be vigilant to risk Japan's economy may lose momentum for hitting price goal. The statement also said to coordinate with govt's fiscal policy, structural measures.

Coronavirus keep’s the driver’s seat…

While China’s optimism to be able to beat the lethal virus, as well as calls of its peak in the next 10 days, triggered the recent risk recovery, increased rate of the death toll and newly confirmed cases keep the risk-tone under pressure. Also challenging the risk-on could be the US updates to shut flights off China.

With this, the US 10-year treasury yields remain mostly directionless around 1.65%, after bouncing off the early October lows on Tuesday, whereas S&P 500 Futures lose 0.1% to 3,275 by the press time.

Earlier, the US data concerning Consumer Confidence and Durable Goods Orders flashed mixed releases whereas Richmond Fed Manufacturing rose to the late-2018 top.

Even so, US President Donald Trump didn’t refrain from pushing the Fed towards more rate cuts. Though, the US Federal Reserve is likely turning deaf ears to the republican leader’s repeated push in today’s monetary policy meeting. However, calls concerning the economic performance and risks from China could be the keys to watch during the Fed Chair Jerome Powell’s press conference.

Technical Analysis

100 and 200-day SMAs, around 108.70 and 108.45 respectively, could keep the pair’s near-term declines limited whereas 21-day SMA near 109.30 and multiple upside barriers near 109.75/80 challenge buyers.

 

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