FxWirePro: USD/JPY struggles to extend gains, investors disappointed after U.S. Senate failed to pass the much-awaited rescue package

USD/JPY chart - Trading View 

Fundamental Overview:

USD/JPY struggles to extend gains, markets disappointed after U.S. Senate failed to pass the much-awaited rescue package.

The major takes clues from the surge in coronavirus figures from the US, Italy and New Zealand.

Also likely to exert downside pressure on the pair are comments from the Fed officials. St. Louis Fed President James Bullard expects the Q2 GDP to shrink by 50% in addition to the surge in Unemployment Rate to 30%.

Most investment banks expect the US economy to suffer an unprecedented economic contraction in Q2. Bank of America Merrill Lynch expects the US initial jobless claims to spike to 3 million this week.

Bloomberg reported economists at Morgan Stanley expect the coronavirus outbreak will inflict greater damage on the US economy than previously forecasted, leading to a record 30% plunge in the GDP in Q2.

Technical Analysis:

USD/JPY was trading 0.39% lower on the day at 110.319 at around 03:55 GMT.

The pair has paused after 2 straight week's of gains and upside remains intact as long as pair holds above 200W SMA.

Doji formation on Friday's candle dents upside. That said, strong support lies at hourly 55-EMA (109.93). Intraday weakness likely on break below.

GMMA indicator shows major trend in the pair is neutral and minor trend in the pair still holds a bullish bias.

Retrace below 200-DMA (108.26) and daily cloud will see resumption of weakness. While upside continuation finds next hurdle at upper Bollinger Band at 112.15.

Major Support Levels: 109.93 (55H EMA), 109.47 (5-DMA)

Major Resistance Levels: 112.15 (Upper BB), 112.40 (Apr 24 high)

Summary: Risk aversion continues to drive markets, virus headlines become the key. Focus also on US Chicago Fed National Activity Index for intermediate moves.