USD/JPY bounces off multi-year lows, trying to stabilize above mid-102.00s
- The Japanese yen rallied hard amid the coronavirus-led global flight to safety.
- The US bond yields collapsed to historic lows on Fed rate speculations.
- USD/JPY nosedives to the lowest level since early November 2019.
The USD/JPY pair struggled to capitalize on its recovery of over 100 pips from the Asian session flash crash to over three-year lows and maintained its heavily offered tone below the 103.00 mark.
The pair added to its recent losses and opened with a bearish gap on the first day of a new trading week. The pair subsequently tumbled to its lowest level since November 2016 amid the coronavirus-led selloff across the global equity markets, which provided a strong boost to the Japanese yen's perceived safe-haven status.
The fact that the number of confirmed cases across the world increased to almost 107,000 as of Sunday, the continuing spread of the virus rattled the global financial markets on Monday. Adding to this, a plunge in oil prices added to the market worries and forced investors to take refuge in the so-called safe-haven assets.
Apart from the global flight to safety, firming expectations that the Fed will cut interest rates by another 50 bps on March 18 aggravated the recent slump in the US Treasury bond yields. This eventually weighed heavily on the US dollar and further collaborated to the pair's sharp fall witnessed during the Asian session.
As the early volatility settled, the pair managed to find some support at lower levels and bounced back above mid-102.00s. However, the uptick lacked any strong follow-through and runs the risk of fizzling out rather quickly, suggesting that the near-term bearish bias might still be far from being over.
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