JPY Analysis 30.10.2019

The US dollar fluctuated in a narrow range, tilted lower during the Asian session to witness the rebound for the second consecutive session from the highest since early August, when it tested the highest since late May against the Japanese yen following the developments and economic data that followed from the Japanese economy and on the threshold Economic developments and data expected on Wednesday by the US economy, including decisions and directions of the Federal Open Market Committee and the upcoming press conference of the Federal Reserve Governor Jerome Powell.

At 06:11 AM GMT, the USDJPY fell 0.05% to 108.84 levels from the opening levels of 108.89, after the pair reached its lowest level during the session at 108.81, while the pair achieved the highest at 108.90.

The Japanese economy followed the release of the seasonally adjusted preliminary retail sales figure, which showed growth accelerated to 7.1% from 4.6% in the previous month of August, beating expectations for a 6.0% growth. To 9.1% versus 1.8% in the prior yearly reading for August, also beating expectations for 6.0% growth.

However, since last month's rise in retail sales in Japan came before the sales tax hike in the world's third largest economy was implemented, we continued on Tuesday. Japanese Economy Minister Yasushi Nishimura said the Japanese government will work hard with the Bank of Japan through fiscal policies. Appropriate in order to emerge from the economic downturn.

The Japanese economy's comments came yesterday as markets looked ahead to BOJ monetary policy makers' decisions and the release of the Bank of Japan's monetary policy statement on Thursday, ahead of Bank of Japan Governor Haruhiko Kuroda's upcoming press conference and amid expectations for further stimulus by the Bank of Japan. Coming to stimulate the third largest economy in the world and reach inflation to the target at two percent.

On the other hand, investors are awaiting the US economy to release preliminary data for the labor market with the release of the indicator of change in private sector jobs, which may reflect the slowing pace of job creation to 125 thousand jobs added to 135 thousand jobs added in September, hours before The monthly report on non-farm payrolls and unemployment rates, as well as the hourly rate of income for the month of October.

The market is then looking to reveal the preliminary GDP figure for the US for the third quarter, which may show a slower pace of growth for the world's largest economy to 1.6% versus 2.0% in the second quarter, and the preliminary GDP reading measured in prices for the quarter. The quarterly pace of growth slowed to 1.8% from 2.4% in the second quarter.

This comes in conjunction with the FOMC meeting in Washington, which is expected to cut interest rates on federal funds by 25 basis points for the third meeting in a row to between 1.50% and 1.75%, and before we witness the upcoming press conference of the Federal Reserve Governor Jerome Powell, following US President Donald Trump's demand for more stimulus and interest rate cuts.

Technical Analysis

USDJPY is showing some slight bearish bias affected by the negativity of the stochastic indicator, which is gradually gaining positive momentum, while SMA 50 continues to provide positive support for the price, to continue moving inside the ascending channel shown in the chart above.

Therefore, we hold onto our bullish outlook provided that stability is above 108.40, noting that our awaited targets start at 109.33 and extend to 110.50 after breaching the previous level.

Expected trading range for today is between 108.40 support and 109.70 resistance.

Expected trend for today: Bullish.