USDJPY analysis 19.12.2019

The US dollar fluctuated in a narrow range tilted to the upside during the Asian session to witness the highest since December 13, when it tested the highest for it since the second of this month and the highest since early August last against the Japanese yen, after revealing the decisions and directions of the makers Monetary policy at the Bank of Japan is on the cusp of a press conference that will be held by Bank of Japan Governor Haruhiko Kuroda in Tokyo, in addition to developments and economic data expected today Thursday by the US economy.

At exactly 05:56 AM GMT, the US dollar pair rose against the Japanese yen by 0.03% to 109.58 levels compared to the opening levels at 109.55 after the pair achieved its highest in a week at 109.68, while it achieved its lowest during the trading session at 109.53.

We have followed the monetary policy makers ’decision with the Japanese Central Bank to keep negative interest rates at 0.10%, which was expected in the markets, with the disclosure of the Bank of Japan’s monetary policy statement that reflected the Japanese central bank’s provision of more flexibility in monetary policy while providing facilities Funding for ETFs with the aim of improving liquidity in the ETF market.

The Bank of Japan also mentioned through the statement of monetary policy that "the economy was in a moderate expansion direction" and that the Japanese central bank "will take additional mitigation measures if there is a greater possibility of losing momentum towards achieving the goal of price stability", and this came after the Japanese government implemented in October Last October, the consumption tax increased to 10% from 8%, which could weigh on consumer spending in the third largest economy in the world.

We would like to point out, because the Japanese government raised its growth forecast yesterday for the next fiscal year 2020/2021, which begins with the beginning of next April, to 1.4% compared to its previous forecast last July, with a growth of 1.2%, while maintaining its expectations for growth during the current fiscal year, which expires With the end of next March at 0.9%, and this comes in the wake of the Japanese government recently approved a financial package worth $ 122 billion.

The expectations of the Japanese government that followed the progress in the trade talks between the United States and China that resulted in a first-stage agreement between them and the decisive victory of British Prime Minister Boris Johnson in the British parliamentary elections, which limited Britain's chances of leaving the European Union without an agreement, included that, private consumption will grow. 0.6% in FY 2019 compared to previous expectations of 0.9% due to declining consumer confidence.

On the other hand, investors are currently awaiting the release of the current account reading from the US economy, which may reflect a narrowing of the deficit to $ 122 billion compared to $ 128 billion during the second quarter, in conjunction with the disclosure of the Philadelphia industrial index reading by the largest industrialized country globally, which may Reflects the shrinkage in breadth to 8.1 in value from 10.4 last November.

This also comes in conjunction with the issuance of the aid claims index for the week that passed on December 14th of this year, which may reflect a decline by 27 thousand requests to 225 thousand requests compared to 252 thousand requests in the previous weekly reading, while the reading of the subsidy applications index may explain to investors For the week that ended on the seventh of this month, an increase of 4 thousand requests to 1,671 thousand applications compared to 1,667 thousand requests.

Up to the disclosure of the US housing market data with the release of the Existing Home Sales Index, which may show a decline of 2.1% to 5.44 million homes compared to a 2.2% rise at 5.46 million homes in October, and this comes in conjunction with the release of the leading indicators reading that may clarify An increase of 0.1% compared to a decline of 0.1% in the previous reading for the month of October.

Technical analysis

The dollar against the yen did not show any strong movement yesterday, to remain stable near 109.33 level, maintaining its stability above it, and therefore, there is no change to the upside scenario that depends on stability above the mentioned level, supported by the moving average 50, noting that our next main target It is located at 110.50.

The expected trading range for today is between 109.00 support and 110.40 resistance.

Expected trend for today: bullish.