USDJPY remains under the selling pressure on Monday, having received local support around the 107.00 handle. the Japanese yen demand persists despite investor sentiment has improved substantially at the start of the week as investors express hopes for easing lockdowns across the globe. Still, the ongoing coronavirus pandemic makes market participants cautious, with concerns over the outlook for the global economy persisting.
Today, the Bank of Japan expanded its stimulus measures again and pledged to buy an unlimited amount of bonds. Furthermore, the central bank’s Governor Haruhiko Kuroda said the regulator was ready to act further to fight the impact of the coronavirus. At the same time, the Bank of Japan sharply cut its economic forecast and projected inflation.
Following the meeting, the yen remained buoyed, suggesting traders were underwhelmed by additional supportive measures announced by the central bank. Also, the USDJPY pair struggles to regain the upside momentum amid dollar weakness, with the greenback losing momentum against major counterparts at the start of the week.
From the technical point of view, the pair needs to hold above the 107.00 handle in order to avoid deeper losses in the short term. Once below this level, the dollar may target the 106.75 intermediate support. On the upside, the immediate resistance arrives at 107.60, where the intraday highs lie.
Among major events, the Federal Reserve and the ECB policy meeting will be in focus this week. It is widely expected that major central banks will deliver additional stimulus measures amid the persisting recession threat. If so, investor sentiment could improve further, suggesting the safe-haven yen demand could wane.
In the longer run, however, the Japanese currency may yet gain on the consequences of the coronavirus outbreak along with gold and Swiss franc. In this scenario, USDJPY could dip below the 102.00 handle to get back to multi-year lows registered in March. In the short-term charts, the key moving averages continue to act as resistance levels for the greenback.