JPY Analysis 07.10.2019

The US dollar fluctuated in a narrow range, tilted lower during the Asian session to witness the bounce for the fifth consecutive session from the highest since September 19 against the Japanese yen following the developments and economic data followed by Monday by the Japanese economy and amid the lack of economic data at the beginning of this Week by the largest US economy in the world.

At 05:59 AM GMT, USD / JPY fell 0.09% to 106.87 levels from 106.97 opening levels, after hitting a session low of 106.57 and a high of 107.05. The pair started the session on a bullish price gap after closing last week at 106.94 levels.

On the Japanese economy, we followed the release of the leading indicators which showed the contraction widened to 91.7 vs. 93.7 in July, worse than expectations for a contraction to 91.8. Otherwise, we followed last Friday the Japanese Prime Minister Shinzo August expressed The fact that his Government is prepared to take all necessary measures without hesitation to maintain the recovery of economic growth in the third largest economy in the world.

Japanese Finance Minister Taro also pointed out last Friday that there is no urgent need to strengthen monetary easing by the Bank of Japan, which came after the Japanese government activated its decision to increase sales tax to 10% from 8% at the beginning of this month. This is amid concern about the implications of the decision on the future recovery of the economy, which continues to suffer from the stability of wage growth and weakening the growth of consumer spending.

Japanese Foreign Minister Taro Kono also said at the end of last week that Tokyo and Washington intend to activate their recent trade agreement at the United Nations as of early 2020, noting that the United States wants the trade deal to take effect early. Next January and that Japan has no objection to that date.

On the other hand, investors are looking forward to brief remarks by Federal Reserve Governor Jerome Powell at a movie premiere in Salt Lake City, and his participation on Wednesday in the Federal Reserve's listening panel discussion in Kansas City.

This comes ahead of the release on Wednesday of the minutes of the FOMC meeting held on 17-18 September, in which it was approved to cut the federal funds rate for the second time in a row by 25 basis points to between 1.75% and 2.00 This was in line with expectations, with the Commission's expectations for growth, inflation and unemployment in addition to the future of interest rates for the next three years.

Fed Governor Powell noted at the end of last week's opening remarks at a Fed event in Washington that the US economy is good so far and that the Fed's task is to keep the economy as strong as possible. Approaching the target at two percent.

Powell also said Friday that the US economy faces long-term challenges as low interest rates make it harder to cut interest rates on federal funds in a recession, adding that the Fed is now looking at how efficient monetary policy tools are currently available. This year there are two meetings of the Federal Open Market Committee and they will discuss the state of the economy.

Technical analysis

USDJPY has retested the broken neckline of the previously completed double top pattern and held it below it, to maintain the negative effect of this pattern, and the price needs to break above 106.70 to confirm heading towards our next targets which are located at 106.06 then 105.50.

Therefore, we hold onto our bearish outlook, supported by the negative signal now provided by the Stochastic, provided that the price stays below 107.70.

Expected trading range for today is between 105.80 support and 107.50 resistance.

Expected trend for today: Bearish.