JPY Analysis 31.10.2019

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, including The Bank of Japan's monetary policy-makers' decisions and attitudes ahead of Bank of Japan Governor Haruhiko Kuroda's press conference are on the eve of economic developments and data expected Thursday by the world's largest economy.

At 06:04 AM GMT, the USDJPY fell 0.16% to 108.68 levels from the opening levels of 108.85, after the pair reached its lowest level during the session at 108.59, while the pair achieved the highest at 108.90.

The second largest economy in Asia, the third largest in the world and the third largest industrialized country in the world, followed the release of industrial sector data which showed a rise of 1.4% versus a decline of 1.2% in August, beating expectations for a 0.4% rise. The index is up 1.1% versus a 4.7% decline in August, also better than expectations for a 0.1% decline.

This came before the Bank of Japan's monetary policy makers' decision to keep interest rates negative at 0.10%, which was expected in the markets, with the release of the monetary policy statement of the Japanese central bank, and before witnessing the press conference held by Bank of Japan Governor Haruhiko Kuroda. In Tokyo, he noted that the bank was moving ahead with its stimulus and asset purchase program until the inflation target of 2 percent was achieved.

We have also followed the release of the Consumer Confidence reading which showed a rise to 36.2 vs. 35.6 in September, beating expectations of 35.3, and the release of the Japanese housing market data with the release of the annual Housing Starts Index. The decline narrowed to 4.9% from 7.1% in August, beating expectations for a 6.6% decline.

On the other hand, investors are currently awaiting the US economy to reveal personal spending and income data which may reflect an acceleration in personal spending growth to 0.3% vs. 0.1% in August, and slower personal income growth to 0.3% vs. 0.4% in August, Core CPI reading may show a steady pace of growth in September at 0.1%.

This comes in conjunction with the release of the labor unit cost index, which may reflect the acceleration of growth to 0.7% compared to 0.6% in the second quarter, and the issuance of claims for the benefit last week on the 26th of this month, which may reflect an increase of 3 thousand applications to 215 thousand requests, Manufacturing data is released with the Chicago PMI reading which may reflect a contraction in contraction to 48.4 from 47.1 in September.

On the other hand, on Thursday we followed the end of the October 29-30 Federal Open Market Committee meeting in Washington, during which the Fed's monetary policy makers decided to cut the federal funds rate for the third consecutive meeting by 25 basis points to between 1.50% and 1.75%, which was in line with expectations.

Federal Reserve Governor Jerome Powell noted at a press conference yesterday that the Federal Reserve will temporarily stop adjusting monetary policy until the end of the year unless expectations change substantially in the coming period. The Fed will require a large and sustained movement in inflation to consider resumed rate hikes.

Technical Analysis

USDJPY traded markedly positive yesterday reaching the first awaited target at 109.33, bouncing down to approach 108.40 once again, noting that the stochastic is reaching oversold areas now, awaiting the price stimulus to resume the upside bias in the coming period. , The upside scenario remains valid unless 108.40 is broken and stability below.

SMA 50 supports the suggested bullish wave, noting that a break above the first target will push the price to 110.50 as the next major target.

Expected trading range for today is between 108.10 support and 109.50 resistance.

Expected trend for today: Bullish.