Chart of the Day USDJPY
Protracted Correction USDJPY
Vacillating risk sentiment has swung back to negative following news that Hubei province had “revised” its way of counting Covid-19 infections, resulting in significantly higher numbers of new cases and deaths. The news jolted market sentiment that had been conditioned by signs that the outbreak was peaking in recent days. Global stocks are lower and commodity prices have fallen back and the predictable outcome in the G10 FX space is a bid for the JPY.
In the latest Politburo meeting, China’s top policy makers vowed to step up more counter cyclical measures via larger fiscal stimulus to support the growth. Meanwhile, it also ordered the prudent monetary policy to be more flexible, hinting at the possibility of more liquidity injection and rate cut in the pipeline. Risk sentiment was overshadowed this morning by the jump of confirmed cases reported by Hubei province as a result of revision of the counting method. The “clinically diagnosed” cases will also be included in daily disclosure. Nevertheless, after the revision, the fatality rate in Wuhan dropped significantly to 3.1% from 4.2% while % of patients in critical condition also fell to 15.6% from 24.4%. The ratio in Wuhan started to converge to the national average. This is positive as this may alleviate the concern that this virus is still evolving in the epicenter Wuhan
From a technical and trading perspective, the USDJPY continues to trade within an erratic corrective pattern, frustrating bulls and bears with its lack of follow through. The current pattern suggests we are trading within a brader rising wedge structure. It appears likely given the current momentum and sentiment divergence as price retests prior range highs, we will likely see another leg lower to test bids back towards 108 as this level supports, once again wrong footing the market, then we may see the final leg of upside to 112/112.50 before continuing the broader downtrend.
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Roz has been engaged in the financial markets since 2017, specializing in Foreign Exchange, Before joining to FOREX IN WORLD she start to learn forex trading related information.
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