USD/JPY dips below 105.00 as coronavirus concerns resurface

• USD/JPY extends early Asian session losses to levels below 105.00. 
• Risk appetite weakens on fears of coronavirus lockdown restrictions. 

USD/JPY is feeling the pull of gravity alongside coronavirus-led risk-off action in the equity and bond markets. 

The pair is currently trading in the red near 104.89, representing a 0.23% decline on the day. The S&P 500 futures are down 0.27% on the day, and the US 10-year yield hovers at 0.87%, down two basis points on the day. 

The risk appetite has weakened as the second wave of the coronavirus is accelerating in the US. Investors fear the authorities may respond by imposing the economically-painful lockdown restrictions. 

Besides, investors could be pricing out the optimism factored in following the US drugmaker Pfizer's announcement of the coronavirus vaccine's positive results. 

On Thursday, the US Federal Reserve Chair Jerome Powell said that while the progress on the vaccine front is welcome news, it does not nullify near-term economic risks from rising virus cases.

Powell's comments also underscored the need for additional US fiscal stimulus. With the split Congress, a massive spending program looks unlikely. That does not imply dollar strength as the Federal Reserve has the ability and is willing to do the heavy lifting. 

Technical levels