USDJPY Trades Lower as Rising Coronavirus Cases in the US Spark Risk Aversion

USDJPY traded lower in yesterday’s trading as risk aversion dominated market sentiment. The currency pair fell from an intraday high of 107.22 to bottom at 106.56, before finishing the day at 106.85 which was 25 pips below its opening price. 

The rising number of cases in the US triggered a wave of panic among the financial markets yesterday. According to the CDC, the number of new cases in the US rose by 20,486 which was higher than the previous reading at 17,376. Investors are worried that if the trend continues, the US could once again impose lockdowns. This also confirms what Fed Reserve Chairman Powell said in his speech on Wednesday. According to him, the country will never really recover until people feel safe from the coronavirus.

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USDJPY Outlook

On the 1-hour time frame, it can be seen that USDJPY is testing resistance. By connecting the highs of June 9 and June 11, we can see that the currency pair is currently trading around the falling trendline. Reversal candlesticks around its current price level, 106.80, could mean that we may soon see USDJPY slide even further.

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The daily time frame suggests that the next support level could be at 106.00 where the currency pair bottomed on May 7.

Alternatively, a strong bullish close above the falling trendline on the 1-hour chart could mean that there are still buyers in the market. With this, we may soon see the currency pair rally to 107.70 where it may test resistance at the 200 SMA.More content