USD/JPY Responded with Various Speeds in Times of Crisis

Citibank‘s latest forex insight discussed the outlook of USD/JPY and compared the currency pair’s performance against the backdrop of 3 disastrous historical events, namely the Great Hanshin Earthquake on January 17, 1995, the Fukushima Nuclear crisis on March 11, 2011 and the 2020 coronavirus pandemic that triggered Abe's declaration of national emergency on April 16, 2020. Citibank concluded through the observation that USD/JPY has responded to these times of crisis with different speeds.

After the Hanshin earthquake, the USD/JPY reaction was relatively slow. After about seven weeks, the USD/JPY fell by about 10.5%, followed by further decline.

After the nuclear power plant accident in Fukushima, the response was much quicker, and the USD/JPY fell by about 8.5% in 5 trading days.

After Abe declared Japan s state of emergency, the currency pair dropped in the following 1-7 weeks with an average decline of about 9.5%, which shows that the USD/JPY will fall between 99-97 in the next few weeks (the key support level is below 99-101). Note that 106.92 has twice served as a support, and if the price breach below this level for the third time, the downward trend can be further confirmed.