USDJPY analysis 12.02.2020

The US dollar fluctuated in a narrow range tilted to the upside during the Asian session against the Japanese yen after the developments and economic data that it followed on the Japanese economy and on the cusp of developments and economic data expected on Wednesday by the US economy, which includes the activities of the second half of the semi-annual testimony of the Governor of the Federal Reserve Jerome Powell in front of the Congress in Washington.

At exactly 06:01 am GMT, the US dollar pair rose against the Japanese yen by 0.06% to 109.86 levels compared to the opening levels at 109.79, after the pair achieved its highest level during the trading session at 109.89, while the pair achieved its lowest at 109.77.

We have followed about the Japanese economy, the Bank of Japan revealed the annual reading of the M-2 bank lending index, which showed an acceleration in the pace of growth to 2.8%, in line with expectations, compared to 2.8% in the previous annual reading of last December, and this came before we witnessed the disclosure The annual preliminary reading of the machinery index for the past month, which reflected the widening of the decline to 35.6% compared to 33.5% in December.

On the last level, investors are currently looking for what will be revealed by the speech of Federal Open Market Committee member and Chairman of the Federal Reserve Bank Patrick Harker about the economic outlook in the state of Pennsylvania, before we witness the activities of the second half of the semi-annual testimony of the Governor of the Federal Reserve Jerome Powell Cash before the Senate Banking Committee.

This comes hours after the Federal Reserve Governor Powell delivered on Tuesday the first half of his semi-annual testimony about monetary policy before the Financial Services Committee in the House of Representatives, through which he expressed the fact that the current monetary policy of the Federal Reserve is appropriate and that inflation is expected to rise to the goal of the Federal Market Committee Open at two percent in the next few months with his statement that core inflation is at 1.6 percent.

Powell also noted yesterday that the Federal Reserve began facilitating monetary policy to support the economy since the second half of last year, and that the current monetary policy supports growth and contributed to improving conditions in the labor market in addition to supporting the growth of inflationary pressures towards the goal of the Federal Committee, adding that the Federal Reserve places in Considering that reducing interest on federal funds more broadly limits its ability to act at the time of an economic recession.

Powell reiterated, within his testimony before Congress, his expectations that the Federal Committee would go ahead in purchasing bonds during the second quarter of this year and that the repo rate will remain active in the markets until next April at the very least, and we would like to point out that many market analysts believe that the reserve operations The Federal Reserve is a form of quantitative easing that is left untouched, while the Federal Reserve refuses to call a quantitative easing on what it does.

In another context, Powell mentioned the Corona virus, which killed more than a thousand people, mostly in China, specifically in the city of Wuhan, which Corona started, where he asked whether the impact of the deadly virus on China and the United States is temporary or permanent, explaining that it is too early to talk about The extent of its impact on his country's economy, adding that the Federal Reserve will closely monitor developments related to the virus, which may affect global supply chains, including America.

It is reported that US President Donald Trump tweeted yesterday on his official account on Twitter during Powell's testimony before Congress, "The interest on federal funds is very high and the US dollar is putting pressure on exports". Otherwise, investors are now looking by the US economy to reveal the Federal Reserve reading of the federal budget That could reflect the deficit narrowing to $ 10.7 billion, compared to $ 13.3 billion in December.

Technical analysis

The dollar versus the yen did not show any strong movement yesterday, to continue to fluctuate around 109.75, and as long as the price is above 109.33, our bullish outlook will remain valid for the next period, supported by the approach of the stochastic oscillator from oversold areas, waiting to achieve our positive targets that start at 110.50 It extends to 111.50.

The expected trading range for today is between 109.30 support and 110.50 resistance.

Expected trend for today: bullish.