Daily Market Recap - USDJPY

The US dollar is stabilizing against the Japanese yen as markets process the recent series of interventions from the US Federal Reserve. The latest aggressive monetary policy plan has slowed the advance of the USD as investors contemplate the inflationary effect of an increased USD supply.

Indeed, the US Fed has stated its intention to provide a vast amount of liquidity through various open market operations and asset buying. The central bank has passed resolutions allowing it to purchase an unlimited amount of treasury bills and even corporate bonds, which the US lawmakers now need to approve.

Heightened hopes of rapid approval of the coronavirus economic relief bill in the US congress have boosted equity markets. As of writing, all major global indices are up significantly with the Dow leading the charge in the US at 11.37 percent. The US dollar index (DXY) has pulled back slightly today however, dropping as low as 101 before paring its losses on the back of rising treasury yields.

From a technical perspective, the USDJPY has nearly reversed all of its losses since late February. The pair was poised to test the 112.145 resistance level today but selling pressure seems to have taken over. Momentum is expected to turn to the downside as coronavirus fears continue to support safe-haven assets such as gold and yen.

(Chart Source: Tradingview 24.03.2020)

Should the spread of infection carry on unabated in the US, risk-off sentiment will likely return in the markets. Current support should be felt around 110 handles. At which point traders should pay close attention to the price action as it will help determine short term direction. A bearish target of 108.443 can be envisioned in the coming trading sessions.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.