USDJPY traded lower in today’s Asian session after US President Donald Trump’s plans to contain the coronavirus pandemic failed to impress. The currency pair dropped more than 1.07% to a low of 103.88 after his press conference. As of this writing, USDJPY recouped some of its losses as it trades at 103.96.
As expected earlier this week, Trump proposed fiscal measures to support the economy amid the coronavirus pandemic (as declared by WHO). He asked the Treasury to suspend tax payments amounting to 20 billion USD. On top of it, he also made a request to Congress to increase available funding for small businesses by 5 billion USD. None of these measures came as a surprise to market participants and could be the reason why equities and the dollar failed to surge following the news. The Nikkei 225 even fell below 19,000.00 this morning.
What may have taken everyone off-guard was the imposition of a 30-day travel ban from those coming from Europe except for the UK.
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The setup on the daily time frame suggests that the recent uptick we saw on USDJPY may not have been anything more than just a pullback. By drawing the Fibonacci retracement tool from the high of February 20 to the low of March 10, it can be seen that the 38.2% Fib level held.
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A closer look at the 1-hour time frame also reveals a bearish setup on USDJPY. The currency has made lower highs following a series of higher highs. Consequently, a head and shoulders pattern has formed at the 38.2% Fib level. The currency pair has already broken support at the neckline. If sellers can sustain their momentum, USDJPY could soon fall back to its multi-year lows at 101.17.
On the other hand, a close above today’s highs could mean that there are still buyers in the market to push USDJPY higher. Near-term resistance for the currency pair is at yesterday’s highs at 105.62.More content
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