The USD/JPY currency pair has remained relatively muted for the better part of Wednesday morning and afternoon as the markets sway towards the side of caution over the increasing coronavirus infections.
The USD/JPY exchange rate has been stuck in limbo for the better part of the day with barely any significant bullish or bearish runs taking place. The currency pair has been trading below the 109.22 resistance level and the bulls have been losing their momentum at around the 109.02 level, thus the reversals. Meanwhile, the price saw some support at around 108.62 although it did manage to break past that level, and the bearish momentum failed to reach the 108.42 support level.
The USD/JPY performance on Wednesday highlights the cooling momentum compared to the previous trading session on Tuesday when the price of the currency pair remained bullish for the most part. That bullish performance was mainly fueled by the optimism in the investor landscape over the reported declining cases of coronavirus infections on Monday and Tuesday. However, the muted performance of the currency pair on Wednesday was likely caused by investor caution amid reports of an increasing infection rate on Tuesday evening.
The COVID-19 pandemic has been a major blow for the global economy. Even the major economies such as the UK, the U.S, Germany, China, and Japan have also been hugely affected by the economic downturn caused by the virus. Interestingly, both the Japanese Yuan and the U.S dollar are safe-haven currencies and so investors use them to avoid losses when other riskier currencies start taking a hit.
The U.S dollar has been the go-to currency for many investors over the past few weeks when the rest of the global currencies are affected by the economic fallout of the coronavirus. This is mainly because central banks of foreign countries have been rushing to increase their dollar holdings so that they can better shield their economies from the fallout. However, a series of economic measures have also fueled recovery attempts that cause rallies against the U.S dollar, and thus the volatility that was evident in the market in the past few days.