USD/JPY snaps two-day winning streak to sub-110 amid fresh coronavirus fears

• USD/JPY pulls back from three-week high amid fresh risk-off.
• A sudden increase in coronavirus cases from China pushed back calls of the receding outbreak, upbeat Japanese PPI also played its role.
• Eyes on the US inflation data and coronavirus headlines for now.

USD/JPY declines to 109.90 as the Tokyo open welcomes fresh risk aversion wave on Thursday. The recent surge in coronavirus cases from Hubei changed the markets’ bias towards riskier assets.

Coronavirus back in action…

The latest figures of fresh coronavirus infected and dead people from Hubei registered a sharp increase due to the change in the revised diagnostic standard. The numbers mention 14,840 new coronavirus cases with the death toll rising by 242 to 1,310 at the end of February 12, 2020.

After the news, the risk barometers, namely the S&P 500 Futures and the US 10-year treasury yields, dropped heavily. The S&P 500 Futures slipped nearly 0.50% to an intra-day low of 3,366.62 whereas the US 10-year bond yields also revisited 1.60% mark.

Previously, the market’s trade sentiment was on recovery mode amid expectations that the coronavirus will have a short-term impact and also as the cases were declining gradually. It should also be noted that the top-tier global rating agencies like S&P, Fitch and Moody’s earlier flashed mixed signals concerning coronavirus and left the door open for risk-off.

On the economic front, Japan’s Producer Price Index (PPI) rose beyond 0.0% and 1.5% respective forecasts for January month to 0.2% and 1.7% in that order.

Moving on, coronavirus headlines will now be taken seriously while the US inflation numbers will decorate the economic calendar. Also likely to affect the pair are talks surrounding the US Senate’s debate to restrict President Donald Trump’s rights to go on a war with Iran.

Technical Analysis

Unless breaking the yearly top near 110.30, the risk to witness 109.30 back on the chart seems high.