USD/JPY stays depressed near six-week low under 107.00 on Tokyo open
- USD/JPY registers five-day losing streak, fails to respect the latest risk-reset.
- Hopes of economic restart confront a likely US-China tussle.
- Recently downbeat US data favor cautious sentiment ahead of the key US GDP, FOMC.
USD/JPY drops to 106.70, down 0.17% on a day, as Wednesday’s market-opening bell rings in Tokyo. That said, the pair dropped to the six-week low the previous day amid risk aversion and the broadly weaker US Dollar.
In addition to the optimism surrounding further flattening of the coronavirus (COVID-19) curve, policymakers push also increase the odds of the early economic restart, which in turn propels the risk-on sentiment off-late.
Also on the positive side could be the upbeat comments from the BOJ Governor. The Bank of Japan (BOJ) Governor Haruhiko Kuroda said on Tuesday that Japan's financial system remains stable as a whole as banks have sufficient capital buffers.
Additionally, fears of the US-China tussle, due to the Trump administration’s push for investigation alleging the dragon nation for the virus outbreak, weigh on the market’s trade sentiment and increase the Japanese yen’s safe-haven demand.
On the other hand, downbeat data from the US keep the greenback pressured ahead of today’s key US GDP and FOMC meeting. The first estimation of Q1 2020 GDP is likely to spread disappointment with -4.0% figures versus +2.1% prior. Further, the FOMC isn’t expected to alter the present monetary policy but a dovish tone of Chairman Jerome Powell is widely anticipated and could exert additional downside pressure on the USD.
Technical analysis
Unless bouncing back beyond 106.90, comprising lows marked during the early and mid-April, USD/JPY is likely to defy the odds favoring its drop towards March 10 top surrounding 105.90.