The USDJPY pair opened the week in the green near the levels 109.80 seen on Friday. The major preserves its gains and now aims at the psychological 110.00 mark (Feb 12 high).
On Sunday, China’s National Health Commission (NHC) reported 2009 new coronavirus cases and 142 new deaths raising the total amount of infected people to 68,500 and the death toll to 1,665 (most victims are citizens of Hubei province). Also, Europe announced its first fatal case – an 80-year-old Chinese tourist who suffered from coronavirus died in France. However, the news was brushed away as the People’s Bank of China allocated 300 billion yuan to fight the negative impact from coronavirus on the economy. Such steps were welcomed by traders and markets witnessed cautious optimism on the first trading day of the new week.
Thus, the Asian equities climbed back to three-week highs while S&P 500 futures were up by 0.25%. And though the US Treasury yields remained mostly flat, the US Dollar Index consolidated near the 4.5-month peaks, kept its bullish tone and supported the major.
Moreover, USDJPY went up on the awful GDP Q4 figures from Japan. Actually, all but one indicator didn’t match the expectations while the annual GDP reading witnessed the biggest fall since 2014. Private consumption arrived at -2.9% versus -2.0% expected and business spending dropped to -3.7% vs -1.6% forecast. Further, imports fell for the first time over three quarters while exports contracted for the second quarter. All the data coupled with modest risk-on weighed on the safe-haven yen and helped the pair to rise.
Today, the US markets are closed due to the Presidents’ Day and all the important releases from Japan are already out, thus the major’s dynamics will be led by coronavirus and the USD.
From the technical point of view, the USDJPY pair sits in a narrow trading range of 109.70-95 with the next target at 110.00. In the 1-hour chart, the major challenges the SMA200, however while it trades above this level, its bullish tone remains unabated. The resistance is seen at 110.10, 110.25 and 111.00. The support is pegged at 109.55-60, 109.30 and 108.95. The breach of the SMA200 H1 may trigger a pullback to the 109.00 region but this is not favored.