USDJPY United States Dollar vs Japanese Yen

The Japanese yen strengthened against its major counterparts during the European session on Tuesday, as concerns over the coronavirus outbreak intensified after Japan reported its fifth case of virus infection and Hong Kong put restrictions on travel from mainland China.

Japanese government confirmed that a tour bus driver who has never been to the central Chinese city of Wuhan has been infected with coronavirus.

The death toll reached 106 in China and the number of confirmed cases soared to 4,515.

The outbreak triggered concerns about its impact on global economy, prompting a flight to safety.

Data from the Bank of Japan showed that Japan producer prices rose 2.1 percent on year in December - in line with expectations and unchanged from the previous month.

Producer prices were flat on month after adding 0.2 percent in November.

The yen climbed to 108.76 against the greenback, after falling to 109.10 at 2:30 am ET. The next possible resistance for the yen is seen around the 106.00 level.

Recovering from its early lows of 120.21 against the euro and 142.46 against the pound, the yen appreciated to more than a 2-month high of 119.81 and near a 3-week high of 141.50, respectively. If the yen rises further, it may locate resistance around 117.00 against the euro and 138.00 against the pound.

The yen spiked up to a 3-1/2-month high of 73.30 against the aussie, 1-1/2-month highs of 70.93 against the kiwi and 82.36 against the loonie, off its previous lows of 73.76, 71.42 and 82.74, respectively. On the upside, 72.00, 67.00 and 80.00 are likely seen as the next resistance levels for the yen against the aussie, the kiwi and the loonie, respectively.

In contrast, the yen fell to 112.42 against the franc, from a high of 112.20 seen in the Asian session. The yen is seen finding support around the 114.00 area.

Looking ahead, U.S. durable goods orders for December, S&P/Case-Shiller home price index for November and consumer confidence index for January are due out in the New York session.

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