USDJPY analysis 02.03.2020

The US dollar rose during the Asian session to witness its rebound from the lowest since October 10, 2019 against the Japanese yen, following the developments and economic data that were followed by the Japanese economy, which included Bank of Japan Governor Hariko Kuroda reported a short time ago that the Japanese central bank will take the necessary steps to achieve stability In the financial markets and on the cusp of developments and economic data expected today Monday by the US economy.

At exactly 6:50 am GMT, the US dollar pair rose against the Japanese yen by 0.74% to 108.25 levels compared to the opening levels at 107.46, after the pair achieved its highest level during the trading session at 108.37, while achieving the lowest in five months at 107.01 , Knowing that the pair started the trading session on a falling price gap after it concluded the trades of the month and last week at 107.89.

On the Japanese economy, we have followed the disclosure of the capital expenditures index reading, which showed a decline of 3.5% against a rise of 7.1% in the previous reading for the third quarter, worse than expectations that indicated a decline of 2.5%, as the reading of the same index excluding software showed a decrease of 5.0% against a rise 7.7% in the third quarter, also worse than expectations, which indicated a decline of 2.0%.

This came before we witnessed the disclosure of the final reading of the manufacturing PMI by Markit on Japan, the third largest economy in the world and the third largest industrialized country globally, which showed contraction shrinking to a value of 47.8 compared to the initial reading of the last month and expectations at 47.6 and 48.8 in January / Last January, we would like to point out, because the reading issuance at a value of 50 or higher reflects a widening, while its reading below 50 indicates a contraction.

In order to reach the event that came as a surprise to the markets today, which is Bank of Japan Governor Harhiko Kuroda’s pledge that the Bank of Japan will take the necessary steps to achieve stability in the financial markets, and the Japanese Central Bank has quickly demonstrated the type of measures that it will take by offering to buy 500 billion yen ($ 4.6 billion) A government bond by repurchase agreement to provide liquidity to market participants, which in turn contributed to allaying investor anxiety.

On the other hand, investors are currently awaiting by the US economy the disclosure of the final reading of the manufacturing PMI by Markit about the United States, which may reflect the stability of the expansion at a value of 50.8, little changed from the initial reading of last month and compared to 51.9 in December, And that is before we witness the release of the construction spending index, which shows a 0.6% increase compared to a 0.2% decline last November.

This comes in conjunction with the disclosure also by the largest economy in the world and the largest industrialized country globally, on the reading of the Institute of Industrial Supply index, which may show a shrinkage of amplitude to 50.5 compared to 50.9 in December, as the reading of the Institute of Industrial Supply measured in prices may show a shrink Expansion of 51.2 versus 53.3 in December.

We would like to point out, because the markets are currently pricing the Federal Reserve to resume cutting interest rates during this year and reducing them by 50 basis points to between 1.00% and 1.25% at the March 17-18 meeting, after cutting them three times by 25 basis points last year. To 1.50% and 1.75%, and looking forward to the Federal Open Market Committee also revealing its expectations for the future of interest rates, growth, inflation and unemployment for the next three years.

Other than that, given the developments of the Corona virus that started in Wuhan, China, the deadly virus has so far claimed the lives of nearly 3,000 people and at least 85,000 infected cases have been confirmed worldwide, amid fears that the Corona virus will spread outside China and turn into a pandemic. Global and authorities are working intensively to contain the infection, especially in China, Iran and Italy as well as South Korea and the United States of America.

Technical analysis

The dollar pair fell against the yen strongly last Friday to succeed in achieving our awaited target at 108.34 and exceeded it to touch the 61.8% Fibonacci correction level at 107.42, noting that the price is re-testing the first level, which is turning into an intraday resistance now, so we would expect the rebound down to resume the bearish path during the upcoming sessions, Noting that breaking 107.42 will push the price to 106.28 as a next negative target.

Therefore, the negative scenario will remain dominating over the intraday and short term, noting that breaching 108.34 then 109.25 levels will stop the expected decline and lead the price to rise again.

The expected trading range for today is between 107.40 support and 108.80 resistance.

Expected trend for today: bearish.