USD/JPY struggles to keep gains above 111.50 amid risk-off

• USD/JPY has backed off from session highs on haven demand for yen.
• Coronavirus outbreak is likely weighing over risk sentiment. 

USD/JPY is trimming gains as yen sellers are struggling to absorb buying pressure amid risk-off mood in the financial markets. 

Rejected at 111.68

The pair's recovery from the session low of 111.27 ran out of steam at 111.68 about an hour ago, allowing a pullback to 111.50. 

The failure to keep gains above the psychological resistance of 111.50 could be associated with deeper declines in the equity markets. 

The S&P 500 futures fell by 1% in early Asia and are now reporting a 1.45% drop. The Dow futures are currently down 400 points and stocks in Australia, South Korea, and China are also flashing red. 

Investors are selling risk, possibly in response to reports stating a rise in the number of coronavirus cases outside China, especially in South Korea and Italy. 

Global Times reported an hour ago that South China's Guangdong Province, along with five other provinces, has adjusted its emergency response level for the prevention and control of coronavirus from a first-level to second-level. So far, however, that failed to bring cheer to the risk assets. 

The pair may end falling back to levels below 111.30 if the German IFO data, due at 09:00 GMT, prints below estimates, bolstering recession fears and strengthening demand for the anti-risk yen. 

Technical levels