USD/JPY surrenders modest recovery gains, fails to find acceptance above 111.00 mark
- USD/JPY fails to capitalize on the early attempted recovery move on Tuesday.
- Concerns over the economic impact of the coronavirus capped the further gains.
- A turnaround in the global risk sentiment might help limit any deeper losses.
The USD/JPY pair failed to preserve its early modest recovery gains and has now dropped back to the lower end of its daily trading range, around the 110.65-60 region.
The pair gained some initial traction during the Asian session on Tuesday and build on the previous session's late rebound from a multi-day low level of 110.33. Receding demand for perceived safe-haven assets – amid a turnaround in the global risk sentiment – weighed on the Japanese yen and turned out to be one of the key factors behind the early uptick.
Investors remain cautious amid coronavirus fears
Bulls further took cues from a goodish bounce in the US Treasury bond yields, albeit a subdued US dollar demand failed to provide any additional boost. This coupled with market concerns that the coronavirus outbreak will weaken the world economy further collaborated towards capping gains, rather prompted some fresh selling at higher levels.
The worries were further fueled by the latest headlines, indicating that the death toll from new coronavirus in S. Korea reports has risen to 10, which led to a sudden fall of around 20 pips over the last hour or so. However, a stronger opening across the European equity markets extended some support and helped limit deeper losses, at least for the time being.
Hence, it will be prudent to wait for a sustained move in either direction before positioning for any meaningful intraday momentum. Later during the early North-American session, market participants will look forward to the US economic docket, highlighting the release of the Conference Board's Consumer Confidence Index, for some short-term trading impetus.
Technical levels to watch