On the first trading day of the week, the USDJPY pair lost ground, dropped from the 110.80 region and eroded the key 110.00 psychological mark. The major recovered some points however continued to trade with daily losses near the aforementioned area.
On Sunday the US Senate refused to advance the third coronavirus relief bill as Democrats said it was too biased and too concentrated on the corporations affected by the virus instead of healthcare workers and other staff. On 47-47 vote, the measure failed to gain 60 necessary votes and wasn’t moved forward. This led to further discussions and a second vote later today. The fears of potential recession in the US spooked investors and risk aversion returned to markets again. In response, the US Treasury yields edged lower dragging the US Dollar down that in its turn weighed on the pair.
Moreover, the traders’ mood was soured as the number of coronavirus cases and deaths outside China continues to go up. Europe is hardly hit by the epidemic and many governments introduced new restrictions to curb the disease. German Chancellor Angela Merkel decided to self-quarantine after her doctor being tested positive for COVID-19. Australia and New Zealand joined most European countries and announced the lockdown.
Meanwhile, Canadian and Australian Olympic Committees addressed to IOC and the World Health Organization with a plea to postpone Tokyo Olympic Games for a year due to the coronavirus spread. However, Tokyo Olympics 2020 Director T. Muto mentioned that they had no intention to put off the Games as it would be ‘bad for athletes involved’. Amid high volatility on markets seen only in the year after the 2008 global financial crisis and heightened fears of the long-lasting economic fallout of the new pandemic, traders are unable to cheer up that supports the safe-haven Japanese yen and pressures the major. However, the DXY that continues to keep above the 103.00 mark limits the decline.
On Monday, in the absence of any relevant macroeconomic releases markets will wait for the second coronavirus bill vote and watch coronavirus headlines.
From the technical point of view, the USDJPY pair sits in the wide daily range of 109.67-111.26 and holds above its SMA200 (today at 107.15) on the 1-hour chart. The support is at 109.30, 108.45 and 106.75 while the resistance is pegged at 111.45, 112.20 and 113.00.