During Friday's European trading session, the USD/JPY currency pair failed to stop its previous session bearish bias and drew some further offers towards the 106.25 marks. However, the currency pair traded with a bearish bias mainly due to the broad-based U.S. dollar weakness triggered by the sharp intraday turnaround in the U.S. Treasury bond yields. The risk-off market sentiment backed by the concerns about worsening US-China relations underpinned the safe-haven Japanese yen, which exerted an additional burden on the currency pair. Currently, the USD/JPY is trading at 106.34 and consolidating in the range between 106.17 - 106.91.
The DragonNation recently took revenge from the U.S. while ordering the closure of the U.S. office in Chengdu, in response to the United States' previous move over the Chinese office closure in Houston. Whereas, the tension fueled further when the U.S. President Donald Trump said that China trade agreement "means less to me now than it did" during his daily press briefing.
The U.S. Secretary of State Mike Pompeo said on the day that the Chinese consulate in Houston was a hub of spying and I.P. theft. However, the overall market mood has soured, which supporting safe-haven assets like the Japanese yen.
As per the latest report, the United States crossed 4 million officially recorded Covid-19 cases, and a significant part of that recorded in just the last 15 days. As per the Johns Hopkins University's latest report, the U.S. has officially recorded 4,005,414 cases. While at least 143,820 people have died so far, and the report suggests that the cases are picking a further pace. Florida has hit with 173 coronavirus deaths, a new record, and case totals run past 389,800. Apart from the US, Victoria, and Tokyo also reporting cases. While India and Brazil keep facing a faster rate of virus spread with fewer resources. However, the gloomy reports related-virus also continues to weigh on the risk sentiment.
Despite the worries about the second wave of the coronavirus infections, the broad-based U.S. dollar failed to maintain its early-day gains and edged lower at least for now possible due to the downbeat U.S. jobless claim data. However, the losses in the greenback could be short-lived or temporary as the coronavirus continuously picking up pace in the U.S. The losses in the U.S. dollar kept the currency pair lower, for the time being. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.02% to 94.625.
The market players will keep their eyes on the releases of the U.S. flash PMI prints, which will be followed by New Home Sales data and influence the USD price dynamics. It also keeps their eyes on the broader market risk sentiment, which could play a key role in influencing the intraday momentum for the currency pair.
Daily Support and Resistance
S1 105.89
S2 106.41
S3 106.62
Pivot Point 106.93
R1 107.14
R2 107.45
R3 107.97
The USD/JPY is trading sharply bearish, falling from 106.600 level to the next support level of 106.198. The USD/JPY may gain support at 105.950, which is extended by the double bottom pattern on 4 hours chart. Increased demand for safe-haven assets can also initiate further selling unto 105.950 and 105.130 marks. The RSI and MACD are also supporting selling preference, while the resistance will linger at 106.600 level. Let's consider trading underneath 106.450 level today. Good luck!