USD/JPY retraces post-BOJ losses to above 107.00
- USD/JPY remains choppy inside the immediate symmetrical triangle.
- BOJ’s unlimited QE, downbeat forecasts failed to please the JPY bears.
- Fed undertakes another targeted measure to combat the liquidity.
- Fitch anticipates further toll on the US oil companies, downbeat energy prices.
Having pulled back from a two-week low during the late-US session on Monday, USD/JPY consolidates around 107.25/30 ahead of the Tokyo open on Tuesday.
Post-BOJ consolidation or risk-on sentiment?
The BOJ matched wide market expectations while removing an upper limit on its bond purchase capacity while also trimming GDP and CPI forecasts. Even so, the Japanese yen gained bids against the majority of its counterparts.
The reason could be the broad US dollar weakness as well as the recoveries in Japan’s coronavirus (COVID-19) fatalities. Also supporting the JPY might be the overall doubts concerning the global economic performance after the virus recedes.
On Monday, Bloomberg said that New daily cases in Tokyo and across the country on Sunday fell to the lowest since early April, with just over 200 infections reported nationwide in the country of more than 125 million. That compares to more than triple that figure in mid-April.
On the other hand, the CNBC quotes Steve Cochrane, chief Asia Pacific economist at Moody’s Analytics while saying that the Japanese and Singaporean economies could struggle the most in the coronavirus pandemic.
It should also be noted that the recent update from the global rating giant Fitch spread fears of further hardships for the US oil companies while also anticipating additional declines in WTI prices.
To fight against the epidemic, the Fed recently undertook specific measures for the Municipalities while the US President Donald Trump also struck upbeat statements during his regular task force briefings.
Even so, S&P 500 Futures part ways from Wall Street close while declining 0.10% to 2,864 amid the initial trading hour on Tuesday.
Moving on, the March month details for Japan’s employment figures, namely Job/Applicants Ratio and Unemployment Rate, expected 1.4 and 2.5% versus 1.45 and 2.4% respective priors, are likely economic catalysts to watch. Other than the data, virus updates will be the key for near-term direction.
Technical analysis
While a descending trend line from March 06, currently near 107.70, keeps exerting downside pressure on the pair, bears will look for entry below 106.90, comprising lows marked so far during the month.