USD/JPY snaps five-day winning streak to near 110.50 amid broad US dollar weakness
- USD/JPY fails to hold onto recovery gains.
- The increasing odds of further delays in the US COVID-19 bill seem to weigh on the greenback.
- Markets pay a little heed to Japan’s downbeat PMIs.
- Equities cheer the global fight against the pandemic.
USD/JPY drops to the intra-day low of 110.64, down 0.47%, amid the initial hour of the Tokyo open on Tuesday. The yen pair recently took clues from the US where policymakers are struggling to get the Trump administration’s COVID-19 Bill through the Senate whereas US President Donald Trump tries to placate traders. In doing so, the quote ignores preliminary readings of Japan’s Jibun Bank PMIs.
The preliminary readings of March month Jibun Bank Manufacturing PMI dropped below 47.6 to 44.8 in March. Further, the Services index collapsed from 46.8 before 32.7, the lowest since September 2007.
Following the US Senators’ failure to get the much-awaited coronavirus (COVID-19) package through, US President, Vice President and Treasury Secretary tried to assure traders that the aid will be agreed soon.
However, CNBC rolled out the news that the Senate is not likely to vote on the Bill today and hence cited further delays into President Trump’s ‘major’ response to the coronavirus.
Even so, the US inflation expectations recovery from the record low amid hopes that the excessive rate cuts and Quantitative Easing (QE) from the Fed could renew buying in the world’s largest economy.
The risk-tone remains positive with the US 10-year treasury yields gaining 22 basis points (bps) to 0.794% while Japan’s NIKKEI marking more than 4.0% gains to 17,640 by the press time.
Earlier during the day, news concerning the vouchers to be sent as help to Japanese people rather than cash and expected one-year delay in the Olympics crossed wires. The Nikkei also conveyed that the Japanese government will cut its economic assessment and will step back from saying that the economy is on the recovery mode during its March month report.
Investors will now pay close attention to the US preliminary PMIs while also keeping eyes on the coronavirus, package headlines.
Technical Analysis
Unless providing a daily close below 200-day SMA level of 108.30, traders can lose hope to challenge February month high near 112.25.