USDJPY analysis 03.03.2020

The US dollar fell during the Asian session to witness its bounce back for the sixth session in nine sessions from the top since April 25 of 2019 against the Japanese yen after the developments and economic data that were followed by the Japanese economy and amid the scarcity of economic data today by the American economy, the largest economy in The world is looking forward to developments in the spread of the Coruna virus, which could make it a global pandemic.

At exactly 05:58 am GMT, the US dollar pair fell against the Japanese yen by 0.51% to 107.78 levels compared to the opening levels at 108.33, after the pair achieved its lowest level during the trading session at 107.66, while achieving the highest at 108.54.

On the Japanese economy, we have followed the disclosure of the annual reading of the monetary base index by the Bank of Japan, which showed an acceleration in the growth rate to 3.6% compared to 2.9% last December, surpassing expectations that indicated an acceleration in the growth rate to 3.0%, and it is reported that The Japanese central bank has started using this indicator as its main operating objective for the monetary base scheme since April of 2013.

This came, before we witnessed the disclosure of the consumer confidence index, which showed a decrease to 38.4 in line with expectations, compared to 39.1 in the previous reading last January. Otherwise, we followed yesterday, Japanese Prime Minister Shinzo Abe expressed that he might By preparing a law enabling him to declare a state of emergency in his country due to the spread of Coruna virus.

In another context, we also followed yesterday the Bank of Japan Governor Hariko Kuroda’s pledge that the Bank of Japan will take the necessary steps to stabilize the financial markets, and the Japanese central bank quickly demonstrated the type of measures it would take by offering to buy 500 billion yen ($ 4.6 billion) of Government bonds by repurchase agreement to provide liquidity to market participants, which in turn contributed to allaying investor anxiety about the risks of spread.

Given the developments of the Coronavirus, which started in Wuhan, China, it has so far killed more than 3,000 people and confirmed that there are at least 89,000 cases worldwide, and we followed yesterday the Director-General of the World Health Organization, Tedros Adhanom, stated that the situation in South Korea, Italy and Iran as well as Japan have become the organization's biggest concern.

On the other hand, investors are currently looking forward to the talk of Federal Open Market Committee member and President of the Federal Reserve Cleveland Bank Loretta Mester about the economic outlook and monetary policy at the annual dinner of the Society of Professional Economists in London, and this comes hours after the US President criticized the Fed’s position and the political situation The current criticism, expressing the delay of the Fed and his Powell Governor in taking decisions.

U.S. President Trump, through his Twitter account via his official account on Twitter, also expressed that Germany and a number of countries are pumping money to support their economy, and that the major central banks in other countries are more strict in making decisions, adding that due to many reasons the United States should have The lowest rate of interest, explaining that this was not done by the Federal Reserve and his Powell Governor.

Markets are currently pricing the Federal Reserve to resume cutting interest on federal funds this year and reducing them by 50 basis points to between 1.00% and 1.25% at the March 17-18 meeting, and after cutting them three times by 25 basis points last year To 1.50% and 1.75%, and looking forward also to the Federal Committee revealing its expectations for the future of interest rates and the rate of growth, inflation and unemployment for the next three years.

Technical analysis

The dollar versus yen retested the previously broken 108.34 level and maintained its stability below it, to resume the bearish bias and approach the pivotal support 107.42, with a reminder that we need to break this level to confirm the continuation of the descending wave in the intraday and short term, whose next target reaches 106.28.

From here, the bearish trend will remain valid for today, supported by the stochastic loss of positive momentum, noting that the continuation of the downside wave depends on stability below 108.34 and the most important below 109.25.

The expected trading range for today is between 107.00 support and 108.40 resistance.

Expected trend for today: bearish.