USDJPY analysis 24.03.2020

The US dollar fell during the Asian session to witness its rebound to the second session from its top since February 24 against the Japanese yen after the developments and economic data that it had reported on the Japanese economy and on the cusp of developments and economic data expected today by the American economy and in the wake of China's announcement of its intention to raise The ban imposed on Wuhan to combat the spread of Corona virus by next April 8, the city from which the coronavirus started spreading worldwide.

At exactly 06:16 am GMT, the US dollar pair fell against the Japanese yen by 0.71% to 110.44 levels compared to the opening levels at 111.23, after the pair achieved its lowest level during the trading session at 110.09, while achieving the highest at 111.35.

We have followed the disclosure of the initial reading of the manufacturing PMI by Markit on Japan, which showed that the deflation widened to 44.8 compared to 47.8 last February, outperforming the expectations that the deflation contracted to 42.1, and that came before we witnessed a bank statement Japan reported an annual core reading of the CPI that showed growth slowed to 0.2% from 0.3% last January.

On the other hand, investors are awaiting the disclosure of the initial reading of the Markit manufacturing and services PMI for the United States, which may reflect the contraction of the industrial sector in the largest industrial country in the world to a value of 45.1 compared to a expansion of 50.7 in the previous reading for the month of February, while it may We are witnessing the expansion of the service sector to 44.1 compared to 49.4 in February.

This comes before we also witnessed by the US economy the disclosure of the Richmond Industrial Index reading that may reflect the widening contraction to 10 versus 2 in February, up to the disclosure of housing market data from the release of the New Home Sales Index, which may indicate a decline 1.8% to about 750 thousand homes compared to a rise of 1.8% at about 764 thousand homes in January.

Other than that, we followed yesterday the Federal Reserve announced a new stimulus package to support the economy from the repercussions of the Corona virus, and the Federal Reserve statement stated that it is committed to using a set of tools to support the economy in this difficult period and thus enhance employment and price stability, explaining that the Federal Open Market Committee has gone ahead Go ahead and closely monitor market conditions and evaluate the appropriate pace of securities purchases at future meetings.

The Fed’s statement also stated that the Federal Committee decided, as of Monday, March 23, that the bank would commit to conducting open market operations according to need, in addition to establishing a new loan program to support students, and that a loan program to support small and medium-sized companies would be announced soon, and we would like to point out that These measures by the Federal Reserve are unprecedented, as it does not place any restrictions on the assets that have been announced to be purchased as necessary.

This comes in the wake of the surprising meeting of the Federal Reserve on the 16th of March, which is the second surprising meeting in less than two weeks, after the previous surprising meeting on the third of this month in which the monetary policy makers of the Federal Reserve decided to return at the benchmark interest rates. Short-term to 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 at the time by 100 basis points to between zero levels and 0.25%, which it remained in since 2008 until the meeting of 27-28 October 2015, after reducing it in the previous emergency meeting by 50 A base point is between 1.00% and 1.25%, and this comes after the committee members cut interest three times by 25 basis points in previous meetings last year.

Technical analysis

The dollar pair against the yen conducted a new test for the level of 111.20 yesterday and maintained its stability below it, to start the day with a noticeable decline and approach the 110.00 barrier, which supports the continuation of our expectations for the downside trend during the coming period, which aims to test the 109.06 level initially.

Therefore, the downside scenario will remain active in the intraday and the short term, provided that the price maintains its stability below 111.20.

The expected trading range for today is between 109.00 support and 111.20 resistance.

Expected trend for today: bearish.