Home Forex News USDJPY Rebounds from 1-Month Lows On Dollar Resurgence

USDJPY Rebounds from 1-Month Lows On Dollar Resurgence

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  • COVID-19 Fears
  • Tokyo Corona Infections
  • Economic releases To Watch

After tanking in the early trading session on Monday, the U.S dollar has rebounded and continues to register gains against the Japanese Yen. The USD/JPY has since found support above the 107.00 level after dipping slightly. The rebound is supported by a resurgent greenback strengthening across the board as risk aversion continues to take a toll on sentiments in the market.

Greenback Resurgence

The fear of the second wave of coronavirus infections continues to rattle the market, sending traders into safe-havens such as the dollar and gold. Likewise, the USD exchange rate has continued to climb higher as traders exit the Yen.

Record spikes in new coronavirus infections and hospitalizations in the U.S and China should keep the Yen under pressure as traders move to safeguard their wealth in Safe-havens. In addition, Tokyo registering its highest number of coronavirus infections since May 5 also continues to affect sentiments around the Yen.

Yen Weakness

A new wave of coronavirus infections threatens to put the Japanese economy under pressure as it is yet to recover from the first round of infections. While the Bank of Japan has implemented a string of stimulus plans, the economy is yet to recover as most of the parts remain under lockdown.

Recent economic release have painted a clear picture of how the economy is struggling to bounce back from the pandemic. The Tertiary Industry Index used to paint a picture of industrial activity in Japan indicates industrial activity continues to contract, three months after coronavirus took a toll of the economy

The Tertiary Industry Index contracted to -6% in May compared to-3.85 in April. Weak economic data should continue to weigh on Yen strength against the dollar, a development likely to push the USD/JPY back to three-month highs

Looking ahead, focus will be on how the dollar responds to the new threat of coronavirus likely to influence the USD/JPY exchange rate after week. Focus on Monday will be n FED Daly Speech as well the release of the Foreign Bond Investment data and Overall Net Capital flows in the U.S.

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