USDJPY Analysis 31.01.2019

The US dollar fell during the Asian session to see its rebound for the fourth session in seven sessions of its highest since the end of December last against the Japanese yen following developments and economic data that followed on the Japanese economy and on the eve of developments and economic data expected Thursday by the US economy, the world.

At 06:03 GMT, the dollar dropped 0.28% to 108.74 from the opening level at 109.04 after the pair hit its lowest level since January 17 at 108.70

We also followed the Japanese economy's release of the Bank of Japan's summary report in conjunction with the preliminary reading of industrial production, which showed a contraction of 0.1% to 1.0% in November, beating expectations of a contraction of 0.5% While the annual reading of the same index showed a decline of 1.9% against the rise of 1.5%, also surpassing the expectations that indicated a decline of 2.3%.

This came before we saw the release of housing market data with the annual reading of homes starting construction, which showed a rise of 2.1% to 961 thousand homes compared to a decline of 0.6% at 957 thousand homes in the previous annual reading for the month of November, Japanese Prime Minister Shinzo Abe said his government and the Bank of Japan will work together to overcome the downturn by adopting all available tools.

Japanese Prime Minister Shinzo Abe said earlier this month that the Japanese government is currently working on a plan to overcome the economic downturn that hit his country in the third quarter within three years, saying that the determination of monetary policy appropriate to the third largest economy In the world is left to the Bank of Japan on the matter.

Bank of Japan Governor Kuroda Haruhiko Kuroda said at the end of last week that the Japanese central bank's neutral interest rates could fall as long-term growth prospects fell in the shadow of demographic changes and that lower expectations could push central banks to cut interest rates. Lead to lower demand for credit and that this could make the financial system less stable.

On the other hand, the markets are currently looking to the US economy for a reading of the Labor Cost Index for the fourth quarter, which may reflect the stability of growth to 0.8%, unchanged from the third quarter, in conjunction with the publication of the index of requests for aid for the week of 26 January, Which may reflect a rise of 16 thousand applications to 215 thousand requests in the previous weekly reading,

Ahead of the Chicago PMI reading, which could reflect a contraction of 61.5 vs. 65.4 last December, to reveal housing market data with a new home sales reading that could reflect a rise to around 569,000 homes Compared with 544,000 in November.

This comes just hours after the FOMC meeting on 29-30 January, which left the committee on federal funds rates at between 2.25% and 2.50% with a further reduction in bond repurchase by $ 50 Billion dollars a month before Federal Reserve Governor Jerome Powell said the panel would be patient about raising interest rates in the coming period.

Technical Analysis

The USD / JPY pair traded with remarkable negativity yesterday to break the 109.16 level and settle below it, which stops the positive scenario suggested in our recent reports and puts the price under negative pressure expected during the coming sessions. The pair completed the formation of a double top pattern with its main target at 108.09.

From here, we expect a continuation of the bearish trend during the coming sessions, noting that the breach of 109.16 and stability above it will reactivate the scenario of the corrective move upward again.

The trading range for today is expected among the support at 108.00 and the resistance at 109.40

The general trend for today is bearish