JPY analysis 03.10.2019

The US dollar fluctuated in a narrow range that tended to decline during the Asian session to witness the rebound for the third consecutive session from the highest since September 19 against the Japanese yen amid the lack of economic data from the Japanese economy and on the eve of developments and economic data expected on Thursday by the economy The US is the largest economy in the world which includes the FOMC members' speech.

At 05:59 AM GMT the USDJPY fell 0.04% to 107.14 levels from 107.18 opening levels, after hitting its lowest level since September 24 at 106.97, while hitting its highest level during trading The meeting was at 107.22.

Investors are now awaiting the outcome of Chicago Fed President Charles Evans' speech on monetary policy in the central banking chain of the Global Accreditation Center in the Spanish capital, Madrid, before we see Fed Governor Randall Quarles delivering a speech entitled “Stability Board”. In 10 years "at the European Banking Summit in Brussels.

This comes in conjunction with the release of the US claims for the past week on September 28, which may reflect an increase of 2,000 applications to 215 thousand applications compared to 213 thousand applications in the previous weekly reading, as may read the index of claims applications for investors for the past week on 21 From last month, an increase of 4 thousand applications to 1,654 thousand applications against 1,650 thousand applications.

The US Markit Services PMI final reading from the US may reflect a steady expansion at 50.9, little changed from the initial reading for September and 50.7 in August, before the ISM reading was released. Expansion may show contraction to 55.1 versus 56.4 in August.

Markets from the world's largest industrialized nations are also eyeing the factory orders figure, which could show a 0.5% decline versus a 1.4% rise in July, before we see another FOMC member and Fed Vice Governor Richard Clarda speaking. He is expected to speak about the economy and monetary policy at the event hosted by the Wall Street Journal in New York.

On the other hand, investors are waiting for the release of the US labor market data tomorrow, before we see Fed Governor Jerome Powell opening remarks at a Fed listening event hosted by the Federal Reserve in Washington, in which several Fed members will also speak amid growing Expectations for the Federal Reserve to move forward for the third time in a row at the end of this month following a series of disappointing economic data.

It is noteworthy that US President Donald Trump on Tuesday expressed that the Federal Reserve's monetary policy and the strength of the dollar are the reason behind the weak performance of the industrial sector in his country, pointing out that the Federal Reserve and his Governor Powell allowed the dollar to rise against other currencies, which negatively affected American manufacturers. He added that the interest rate on federal funds is very high and that the Federal Reserve is hostile to those decisions.

President Trump's tweets on his official Twitter account renewing his attack on the Federal Reserve and Powell's monetary policy came after Tuesday's ISM manufacturing index showed deflation widened to 47.8 from 49.1 in August, contrary to expectations. Widening at 50.4, reflecting the worst performance of the index since June 2009.

In view of global trade developments, we followed yesterday the World Trade Organization (WTO) issued a ruling allowing the United States to impose duties on its imports from the European Union amounting to about $ 7.5 billion per year due to the European Union's illegal financial support for the European aircraft manufacturer Airbus. Customs duties will be imposed on EU goods by October 18.

The escalation of US trade protectionism with the EU has renewed market concerns about global trade tensions, coinciding with the prospect of a new round of high-level trade talks between the world's two largest economies by next week in Washington aimed at resolving trade disputes between the United States and China. As part of efforts to curb the growing trade war between Washington and Beijing.

Technical analysis

USDJPY made strong negative trading yesterday, breaking the 107.70 level and attacking the next support of 107.20, which stops the suggested positive scenario in our recent reports and pressures the price to turn bearish, noting that the features of a double top pattern are currently forming, which supports the chances of achieving more. Of the decline over the coming sessions.

Therefore, the bearish bias is likely for today unless it breaks 107.70 and holds above it again, noting that the awaited targets start at 106.70 and extend to 106.06 then 105.50.

Expected trading range for today is between 106.30 support and 107.70 resistance.

Expected trend for today: Bearish.