USDJPY Tests Neckline of Inverse H&S as Coronavirus Vaccine Begin Human Trials Today
USDJPY is trading higher in today’s Asian session as the yen weakened on risk appetite. The market’s mood was lifted on news that a vaccine would begin human trials today, getting investors excited for a cure against the coronavirus which has put the world in a standstill. USDJPY is currently up by around 0.13% as it trades at 107.84.
According to US biotech company Novavax, it is testing one of its 30 potential vaccines in Melbourne today. With today’s trials, results are expected to come out by the end of July.
The news weakened the Japanese yen because it is more widely known as a safe haven asset. This means that it tends to strengthen in times of risk aversion. Alternatively, when risk appetite is up, demand for the yen typically wanes as higher-yielding assets attract demand flows.
On the 4-hour time frame, it can be seen that USDJPY has been making higher lows after a series of lower lows. Consequently, an inverse head and shoulders pattern has materialized. When you enroll in our free forex trading course, you will learn that this is considered a bullish reversal indicator. This means that a strong bullish close above the neckline resistance around 107.90 could trigger a rally to 109.37 where the currency pair topped on April 6.
On the other hand, if resistance holds, it could mean that USDJPY still has room to trade lower. Near-term support is at 106.77 where the currency pair found support on May 13. If there are enough sellers in the market to push USDJPY below this price, however, we could see it fall even lower to 105.95 where it bottomed on May 6.