The USDJPY pair rose by almost 15 basis points as traders continued to worry about the surging coronavirus cases in the United States. In total, the US dollar index (DXY) is up by more than 10 basis today, an indication that investors are rushing to the safety of the greenback. The pair is now trading at 107.16, which is higher than this week’s low of 106.08.
US coronavirus cases rise
The biggest concern in the trading community is the surging number of new cases in the United States. According to health officials, the number of new cases in the United States rose by more than 38,000 on Tuesday. That was the fastest growth since the country started to release the numbers. Worse, the cases are increasing broadly across the states. For example, states like California, Texas, and Arizona are now reporting their highest number of cases. As a result, the USDJPY is rising because investors are rushing to the US dollar, which is considered the currency of the last resort.
Similarly, cases in Tokyo are rising. According to Japan Times, the city recorded more than 55 new cases on Wednesday, ana alarmingly high number that surprised officials. This was the first time the number of cases moved above 50 since May.
USDJPY rises as Japan data disappoints
On Tuesday this week, manufacturing PMI data showed that the Japanese economy was not recovering as its counterparts in China and Europe were doing. It was the only country where manufacturing activity worsened. And today another data showed that things are not going well in Japan. Data showed that the all industries activity index declined by 6.4% in May after falling by 3.4% in the previous month. Another data showed that foreign investments in Japanese stocks was also weakening.
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USDJPY technical outlook
The USDJPY pair is trading at 107.17, which is higher than this week’s low of 106.04. On the daily chart, the price is above the 50% Fibonacci retracement level. It is also slightly below the 50-day and 100-day exponential moving averages. The pair seems to be forming a bearish pennant and the current price is along its higher side. This means that the price may resume the downward trend as bears attempt to test the previous low at 106.06.
On the flip side, if the USDJPY pair moves above the upper resistance level at 107.15, it will mean that bulls are now in control. This will see the price continue rising.
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