USDJPY analysis 19.03.2020

The rise of the US dollar during the Asian session to witness its bounce back for the sixth session in nine sessions from the lowest since October 3, 2016 against the Japanese yen after the developments and economic data that were reported by the Japanese economy and on the cusp of developments and economic data expected Thursday by the US economy the largest economy In the world.

At 05:43 am GMT, the US dollar pair rose against the Japanese yen by 0.77% to 108.91 levels compared to the opening levels at 108.08, after the pair achieved its highest level since late February at 109.55, while achieving the lowest during the trading session At 107.89.

On the Japanese economy, we followed the disclosure of inflation data with the release of the annual reading of the national consumer price index, which showed a slowdown in growth to 0.6%, in line with expectations, compared to 0.8% in January, as the annual reading of the same index, which excludes fresh food, showed slowing growth to 0.4% vs. 0.7%, below expectations at 0.5%, and the annual reading of the same index excluding energy and fresh food showed growth slowed to 0.6% vs. 0.8%, below expectations at 0.7%.

This came before we witnessed the Bank of Japan unveiling the minutes of its meeting that was held on the 16th of this month instead of the meeting that was scheduled for yesterday and today, 18-19 March, during which the interest rates were kept at 0.10% which came Consistent with expectations at the time, in addition to expanding stimulus with the Japanese central bank raising the target of buying corporate bonds by 2 trillion yen.

Up to the disclosure by the second largest economies of Asia and the third largest economy and the third largest industrialized country in the world after both China and the United States of America, data on the industrial sector with the release of the index of the overall industrial activities, which showed a rise of 0.8% compared to a decline of 0.1%, which adjusted for stability At zero levels in December, it exceeded expectations that indicated a rise of 0.3%.

On the other hand, investors are currently looking to the US economy for the disclosure of industrial sector data with the release of the Philadelphia Industrial Index reading, which may reflect a shrinkage in the expansion of what amounted to 9.5 compared to 36.7 last February, and this comes in conjunction with the release of the aid claims index for the past week On March 14th, which may reflect an increase of 9 thousand requests to 220 thousand requests compared to 211 thousand requests in the previous weekly reading.

This also comes in conjunction with the issuance of the reading of the ongoing subsidy requests for the last week on the seventh of this month, which may reflect an increase of 13 thousand requests to 1,735 thousand applications compared to 1,722 thousand requests, up to the issuance of the reading of the current account, which may reflect the shrinking of the deficit to the value of 109 $ 1 billion versus $ 124 billion in the past third quarter, and with the reading of leading indicators showing growth slowed to 0.1% from 0.8% in January.

This comes hours after the Federal Reserve announced that it will enter the commercial paper markets, which have been frozen in the midst of the economic turmoil, threatening businesses that need financing between today and the other, and the Federal Open Market Committee stated on Tuesday that it will establish a financing facilitation committee for commercial papers to support the cash flow of homes and businesses and that it has formed A special purpose vehicle for purchasing any securities of unsecured assets with $ 10 billion in support from the Treasury.

This came hours after the Federal Reserve’s surprising meeting last Sunday, which is the second surprising meeting in less than two weeks, after the previous sudden meeting on the third of this month in which the Federal Reserve’s monetary policy makers decided to return to the short-term benchmark interest rates. Zero levels reached in the wake of the worsening global financial crisis more than a decade ago.

The members of the Federal Open Market Committee reduced the interest on federal funds by 100 basis points to between zero levels and 0.25%, which they remained from 2008 until the meeting of 27-28 October 2015, after reducing them in the previous emergency meeting by 50 points. The basis is between 1.00% and 1.25%, and this comes in the wake of the committee members cutting interest three times by 25 basis points in previous meetings last year.

The Federal Reserve monetary policy statement stated that the decision to reduce will be effective from Monday March 16, and that the Federal Open Market Committee will carry out repurchases of treasury bonds at a minimum of $ 500 billion per month and mortgage-backed securities at $ 200 billion per month At least, these purchases should be made at the appropriate speed to support the smooth performance of the stock market, treasury and mortgage agency.

Technical analysis

The dollar versus yen pair succeeded in achieving our first awaited target at 109.60 after it managed to breach the 107.98 level, waiting for the mentioned target to go above our next stop located at 111.25, which represents the main downside channel's resistance.

Moving above SMA 50 supports positive expectations, which will remain valid and effective provided that the price maintains its stability above 107.98.

The expected trading range for today is between 108.00 support and 110.00 resistance.

Expected trend for today: bullish.