USD/JPY fills the weekly bearish gap, holds steady near mid-111.00s
- USD/JPY opens with a bearish gap amid heightened coronavirus fears.
- Some renewed USD buying interest helped limit losses, at least for now.
The USD/JPY pair managed to close the weekly bearish gap and is currently placed near the top end of its daily trading range, just above mid-111.00s.
Following the previous session's sharp intraday pullback from multi-month tops, the pair opened with a bearish gap on Monday and was being weighed down by reviving safe-haven demand for the Japanese yen.
The downside remains cushioned amid stronger USD
Market concerns over deepening economic fallout from the coronavirus outbreak were resurfaced on the first day of a new week amid reports indicating a rise in the number of confirmed cases in the north of Italy.
The news weighed heavily on investors’ sentiment and triggered a fresh wave of the global risk-aversion trade. The risk-off mood was evident from a sea of red across equity markets and boosted demand for traditional safe-haven assets.
Bearish traders further took cues from a sharp intraday slump in the US Treasury bond yields, albeit some renewed US dollar strength extended some support, rather attracted some dip-buying and helped limit deeper losses.
The pair recovered around 30-40 pips from daily lows, albeit struggled to capitalize on the momentum and now seems to have stabilized near mid-111.00s, awaiting fresh catalyst before the next leg of a directional move.
In absence of any major market-moving economic releases from the US, the broader market risk sentiment might continue to act as a key determinant of the pair’s momentum and produce some short-term trading opportunities.
Technical levels to watch