On Thursday, the USDJPY traded near the area of yesterday’s lows at 106.80. The US Dollar didn’t manage to capitalize on the recovery attempt seen on Wednesday dragging the pair under the 107.00 mark.

Today, risk-off returned to markets as coronavirus continued to spread outside mainland China and is in full swing in Europe. Italian authorities ordered to shut down all schools and universities until mid-March as the death toll exceeded 100 people and more than 3000 people are infected. In Germany, the number of patients reported on Wednesday climbed to 240 versus 196 on Tuesday. Switzerland confirmed its first death case. The news spooked investors and supported buying interest around the safe-haven yen.

Meanwhile, coronavirus started to attack the North American continent – California governor Gavin Newsom declared the state of emergency to curb the virus. The number of cases in the state rose to 53 while more than 9400 people are being examined. The reports only heightened pressure on markets and risk assets. The 10-year Treasury yields lost more than 8.4% while the S&P 500 futures dropped about 1.50%. The Dollar index declined below 97.00.

In his comments, Fed’s Bullard stressed that it was too early to speak about the outcome of the March meeting and called for the markets not to focus too much on the event. However, despite Bullard’s optimistic hints and yesterday’s US employment data that bettered the expectations, USDJPY stayed deeply in the red zone being unable to stage a rebound.

Tomorrow in the NA docket the US will release the all-important NFP numbers that may influence the major’s dynamics. If the readings are beyond estimates, the US Dollar may find some support and edge higher, however, in the light of recent coronavirus reports the pair’s rally would probably be checked.

From the technical point of view, the USDJPY pair sits much lower than its SMA200 on the 1-hour chart (109.00) and the SMA200 on the 4-hour chart (109.55) suggesting that the sellers are dominant. The support is at 106.80, 105.65 and 104.45 while the resistance is marked at 107.75, 108.60-109.00, 110.70-111.05. Traders will mostly focus on coronavirus putting other events and macro releases on the back burner. So in case of sustainable risk recovery, the major may stage a solid rally, however, such a scenario seems unlikely in the near-term. 


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