USD/JPY: Bulls and bears jostle below 111.00 amid coronavirus fears

• USD/JPY fails to hold onto the previous day’s recovery gains.
• Traders smell fears in the US President Donald Trump’s measured comments.
• Coronavirus updates keep the risk-tone under pressure, US data will decorate the economic calendar.

USD/JPY drops to 110.30 amid the initial minutes of the Tokyo trading on Thursday. The pair recently took clues from the US President Donald Trump’s speech on the coronavirus (COVID-19) while the bears continue to dominate amid fears that the Chinese epidemic will weigh on the global growth.

Despite starting with the upbeat statements like, “We are ready to act and do whatever we have to. The risk to the American people from the virus is very low,” the US President Trump couldn’t hide the fears while saying, “virus will probably spread in the US”.

Watch Live: President Trump and members of the coronavirus Task Force hold a news conference

Following the news, the broad risk aversion got additional strength and weighs on the US 10-year treasury yields and the US equity futures. That said, the bond yields remain close to the record low flashed the previous day, +1.4 basis points to 1.324%, whereas the S&P 500 Futures decline 0.27% to 3,101. Further portraying the risk-off is Japan’s NIKKEI that declines -1.23% to 22,148 by the press time.

Other than the US President’s speech, the run of first coronavirus cases from the US as well as downbeat comments from Moody’s also cites the market’s fear. The global rating giant recently said that China will likely increase infrastructure spending to counter the impact on economic growth from the disruption caused by the coronavirus outbreak. Also portraying risk is the Reuters’ news that the IMF and World Bank are rethinking over their Spring meetings of April 17-19 due to the coronavirus.

Earlier in the day, NIKKEI came out with the news that Japan’s ruling coalition executives have agreed to urge the government to compile a supplementary budget over the coronavirus. This adds a burden on the Japanese economy that is already on the verge of recession following the latest negative GDP figures for Q4 2019.

Traders will now pay close attention to the coronavirus updates from the rest of the world as well as the development of any cures for fresh impulse. On the economic calendar, the US GDP and Durable Goods Orders could grab the market attention.

Technical Analysis

Unless providing a daily closing below 21-day SMA level of 110.00, USD/JPY prices are less likely to revisit 109.50 rest-point. On the contrary, 111.00 holds the keys to the pair’s run-up to challenge the latest high near 112.20.