JPY analysis 08.08.2019

The US dollar fluctuated in a narrow range, tilted lower during the Asian session to witness the bounce for the fifth session in six sessions from the highest since May 31 last yen against the Japanese yen following the developments and economic data that followed from the Japanese economy and on the eve of developments and economic data expected on Thursday from Ahead of the US economy the largest in the world.

At 05:54 AM GMT, the USDJPY fell 0.14% to 106.12 levels from 106.27 opening levels, after hitting a session low of 106.00 and a high of 106.30.

On the other hand, the Japanese economy, the third largest in the world, followed the release of the Bank of Japan's annual bank lending index, which showed a stable growth rate of 2.3%, little changed from the previous annual reading of June, contrary to expectations. The pace of growth was accelerated to 2.4%.

This came in conjunction with the release of the current account reading which showed the surplus shrank to 1,211 billion yen from 1,595 billion yen in May, beating expectations that the surplus would shrink to 1,174 billion yen, while the revised reading of the same index showed that the surplus widened to 1,942 billion yen. Yen versus 1,306 billion yen in May, beating expectations for a widening surplus of 1,757 billion yen.

Japan's Cabinet Office revealed that EcoWatchers' statistic reading of current and future conditions showed that the contraction widened to 41.2 for the current conditions and the contraction to 44.3 for the future versus 44.0 and 45.6 respectively in June, worse than expectations. The contraction widened to 43.6 and 45.4, respectively.

On the other hand, investors are awaiting the US economy for the release of the jobless claims for the week that ended on August 3, which may reflect stability at 215K, little changed from the previous weekly reading, before we see the final reading of the wholesale inventory index. That could show growth stabilizing at 0.2%, little changed from the initial reading for June and 0.4% in May.

Technical Analysis

USDJPY managed to touch our first awaited target at 105.50 and bounce up from there, on its way to test 106.40, which represents initial resistance against the price, accompanied by the significant loss of positive momentum Stochastic, waiting to stimulate the price to resume the main bearish trend, whose targets start A break above 105.50 to confirm the extension of the downside wave towards 104.60.

From here, our bearish outlook will remain valid for today, provided it holds below 106.97.

Expected trading range for today is between 105.30 support and 106.90 resistance.

Expected trend for today: Bearish.