Risk aversion sparked by a spike in the number of coronavirus cases is dominating market sentiment in today’s trading. The Nikkei 225 closed with a 33.5 point or 0.14% loss at 23,827.7. Meanwhile, the Hang Seng Index is down around 80 points or 0.30% at 27,747.1. As for the Shanghai Composite Index, it is in the red by 20.826 points or 0.71% at 2,906.074.
According to officials, the Hubei province recorded 14,480 new cases and 242 new deaths of coronavirus today. This took market participants off-guard because the increase in new cases is ten times more while new deaths were double than that of the previous day. It was made clear that the dramatic increase can be attributed to a change in diagnosing patients. However, it still undermine’s China’s capability and efforts in containing the disease.
Higher-yielding assets were also hard-hit by the news. EURUSD fell to its 2017 lows while NZDUSD and AUDUSD failed to find bids despite optimistic remarks from RBNZ and RBA Governors Orr and Lowe.
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On the daily time frame, we can see that EURJPY made a lower high following a series of higher highs. Consequently, a head and shoulders pattern has become apparent. The currency pair is already trading below the neckline support. This suggests that there may be enough sellers in the market to push EURJPY to its October 7 lows at 117.00.
On the other hand, if the currency pair rallies above its February 5 highs at 121.15, the bearish chart pattern will be invalidated. It may even mean that EURJPY may soon trade retest its January highs at 122.50.