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USD/JPY probes 103.00 after comments from US trigger risk reset

  • USD/JPY holds onto recovery gains.
  • US Coronavirus Task Force briefing triggered risk recovery after the heavily sold markets the previous day.
  • US President Trump will hold a press conference to announce economic measures, US VP Pence cited enough testing kits.
  • Qualitative catalysts to remain as the key driver.

Having slipped near to 101.00 during the previous day, USD/JPY recovers to 103.00 as Tokyo opens for trading on Tuesday. The recent comments from the US policymakers seem to have triggered the risk reset following the portrayal of widespread risk aversion during the previous day.

In addition to US President Donald Trump’s readiness to make ‘major’ economic steps in response to coronavirus (COVID-19), Vice President Mike Pence’s announcement to have enough testing kits in the labs also favored the risk stabilization.

Further, the Treasury Secretary Steve Mnuchin said that US President Trump remains committed to using all tolls for the economy while the Treasurer is constantly in touch with Fed Chair Powell to work on to help small businesses.

With the Coronavirus Task Force briefing renewing the hopes of the US action and conveying the availability of enough testing, the market witnessed a bit of relief from Monday’s selling pressure. As a result, the US 10-year treasury yields recover from 0.55% to 0.61% whereas the S&P 500 Futures also mark 1.8% gains to 2,796 by the press time.

Other than the US, South Korean Finance Ministry also signaled to take steps if there are excessive one-sided moves in FX and help offered additional relief to the traders.

Even so, the COVID-19 risks remain on the cards as there are now more than 14 US states that have declared emergencies due to the virus while updates from Italy and Spain haven’t been upbeat so far.

As a result, investors will keep eyes on the news while expecting any cures to reinstate the trading confidence. However, this doesn’t turn down intermediate pullbacks while also not dimming the importance of today’s press conference by US President.

Technical Analysis

Monday’s low near 101.00, as well as 100.00 round-figure, can question the bears amid oversold RSI while any recovery below August 2019 low near 104.85 remains doubtful.

 

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