USDJPY analysis 06.03.2020

The fluctuation of the US dollar in a narrow range slanted toward decline during the Asian session, to witness its bounce to the eighth session in twelve sessions from the top since April 25, showing the lowest since September 3 against the Japanese yen after the economic data by the Japanese economy Following the speech of the members of the Federal Open Market Committee and on the cusp of developments and economic data expected on Friday by the American economy, which includes the speech of another member of the Federal Committee for the Open Market.

At exactly 6:20 am GMT, the US dollar pair fell against the Japanese yen by 0.22% to 105.93 levels compared to the opening levels at 106.16, after the pair achieved its lowest level in six months at 105.76, while it achieved its highest during the trading session at 106.34 .

On the Japanese economy, we continued to disclose the data for January with the release of the annual reading of the household spending index, which showed a decline in the decline to 3.9% in line with expectations and against 4.8% last December, in conjunction with the annual reading of the average income showed an increase of 1.5% Against a 0.2% decline, beating expectations for a 0.2% rise in December.

This came before we witnessed by the third largest economy in the world revealing the initial reading of the leading indicators, which showed a decrease to 90.3 compared to 91.6 in December, worse than expectations that indicated a decrease to a value of 91.3, while the initial reading of the confidence index showed Up to 94.7 versus 94.1 in December, beating expectations for a 94.5 rise.

We would like to point out that Japanese Prime Minister Shinzo Abe expressed last Tuesday that his government is fully prepared to expand the fiscal stimulus policy and launch a spending package to face many risks, pointing out that this package will be funded from the surplus of the current fiscal year’s budget, which expires at the end of this month and the financial budget For the coming fiscal year, adding that his government is closely watching the impact of the Corona virus on the global and Japanese economy.

Japanese Prime Minister Abe also stressed that his government would not hesitate to take more steps to support demand in the third largest economy in the world, and this came hours after he expressed last Monday that he was preparing a law enabling him to declare a state of emergency in his country due to the spread of Corona virus which coronavirus that started in Wuhan, China and spread recently in many countries including Japan.

In another context, we also followed on Monday, Bank of Japan Governor Harikiko Kuroda pledged that the Bank of Japan would take the necessary steps to stabilize the financial markets, and the Japanese central bank quickly showed the type of measures that 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 concerns about the spreading risk.

On the other hand, we have just followed the talk of members of the Federal Open Market Committee, President of the Minneapolis Federal Reserve Bank Neil Kashkari, who participated in a panel discussion at the University of Minnesota in St. Paul, and the talk of New York Federal Reserve Chairman John Williams about monetary policy and economics at the services dinner. Finance for the New York Foreign Policy Association.

This came amid markets' aspiration to reveal the US labor market data for the past month, which may reflect the stability of unemployment rates at 3.6%, little changed from what they were in January, with a reading of the employment change index for sectors other than agriculture showed a slowdown in the pace of job creation To 175 thousand jobs compared to 225 thousand jobs in January, while reading the hourly average income index may show that growth accelerated to 0.3% compared to 0.2%.

This comes in conjunction with the release of the trade balance reading, which may reflect the narrowing of the deficit to $ 46.3 billion compared to $ 48.9 billion in December, and before the disclosure of the final reading of the wholesale inventory index, which may explain the stability of the decline at 0.2%, up to the participation of Williams along with a member Another on the Federal Reserve is Boston Fed President Eric Rosengren at a panel discussion titled "Monetary Policy and Lower Zero" in New York.

It is noteworthy that the Federal Reserve held a surprising meeting last Tuesday through which the members of the Federal Open Market Committee decided to reduce the interest on federal funds by 50 basis points to between 1.00% and 1.25% after fixing them in the previous two meetings of the Federal Reserve at between 1.50% and 1. 75%, and after reducing it three times by 25 basis points in previous meetings last year.

In the same vein, we also followed up on Tuesday, the press conference held by Federal Reserve Governor Jerome Powell after the decision to suddenly reduce markets to short-term benchmark interest rates, through which he noted that the decision came to support the American economy, while touching that over the past years wages increased and improved The labor market and that the committee has repeatedly stressed that the current monetary policy is appropriate.

Technical analysis

The dollar versus yen pair succeeded in achieving our awaited target at 106.28 yesterday, and we notice that the price broke this level and closed the daily candle below it, and today begins with a further decline that supports the chances of heading towards the previously recorded low at 104.45 as a next negative station.

Thus, the downside trend will remain dominant in the intraday and short term, supported by the EMA50, noting that breaching 106.28 might push the price to start recovery attempts and make a temporary bullish correction.

The expected trading range for today is between 104.90 support and 106.50 resistance.

Expected trend for today: bearish.