JPY Analysis 26.08.2019

The US dollar fluctuated in a narrow range upward during the Asian session to witness the bounce for the sixth session in ten sessions from the lowest since January 3 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 Friday from Before the US economy, which includes Fed Governor Jerome Powell's speech during the economic policy seminar Jackson Hole at the Kansas City Fed.

At 05:51 AM GMT, the USDJPY rose 0.17% to 106.62 levels from 106.44 opening levels, after hitting a session high of 106.65 and a low of 106.40.

This was followed by the Japanese economy, the third largest economy in the world revealed inflation data for the month of July with the release of the annual reading of the national consumer price index, which showed a slowdown in the pace of growth to 0.5% compared to 0.7% in the previous annual reading for last June, worse than Expectations that the pace of growth will slow to 0.6%.

In the same context, the annual reading of the national consumer price index excluding fresh food showed that the pace of growth stabilized at 0.6%, little changed from the previous annual reading in June, in line with expectations, while the annual reading of the same index showed the exception Including energy and fresh food, the pace of growth accelerated to 0.6% compared to the previous annual reading and expectations of 0.5%.

On the other hand, investors are awaiting the US economy to release housing market data from the release of the New Home Sales which may reflect a decline of 0.2% to 645K versus a rise of 7.0% at 646K last June, in conjunction with a conservative speech. Federal Reserve Jerome Powell titled “Monetary Policy Challenges” during the Jackson Hole Symposium.

This comes hours after last Wednesday's release of the minutes of the Federal Open Market Committee meeting held on July 30-31, in which it was acknowledged to cut interest rates on federal funds for the first time in more than a decade by 25 basis points to between 2.00% and 2.25%, which was in line with expectations at the time, with the view that the reduction came to support the pace of growth and combating the weakness of inflation in the shadows of trade protectionism.

Technical Analysis

USDJPY is trading sideways and stabilizing near 106.70, as long as the price is below this level, our bearish outlook will remain valid as a breach through this level will push the pair to make further bullish correction, where the next targets reach 107.70, while the targets of the bearish wave begin. Expected to break 106.06 to confirm the trend towards 105.05 as the next stop.

Expected trading range for today is between 105.70 support and 107.00 resistance.

Expected trend for today: Bearish.