USDJPY analysis 10.04.2020

The US dollar fluctuated in a narrow range slanting back down during the Asian session to witness its bounce for the third session in five sessions from the top since March 27, while it is still in the process of its second consecutive weekly gains against the Japanese yen after the developments and economic data that it followed from the economy The Japanese are on the cusp of developments and economic data expected Friday by the US economy, which includes the speech of members of the Federal Committee for the Open Market via satellite.

At exactly 06:08 am GMT, the US dollar pair fell against the Japanese yen by 0.07% to 108.41 levels compared to the opening levels at 108.49, after the pair achieved its lowest level during the trading session at 108.33, while achieving the highest at 108.59.

On the Japanese economy, we followed the release of the PPI reading, which is an initial indicator of inflationary pressures, which showed that the contraction widened to 0.9% compared to 0.4% last February, worse than the expectations that indicated a 0.6% contraction, as the annual reading of the same index indicated a contraction 0.4% vs. 0.8% growth, also worse than forecasts for a 0.1% contraction.

This came in conjunction with the issuance of the annual reading of the bank lending index, which showed a slowdown in growth to 2.0% compared to the previous reading for the month of February and expectations at 2.1%. Otherwise, we followed yesterday, the Governor of the Bank of Japan Haruhiko Kuroda expressed that the Japanese central bank will not hesitate to expand facilitating if What was needed was that, given the fact that the outbreak of the Corona virus has a severe impact on his country's economy.

It is reported that Japanese Prime Minister Shinzo Abe declared last Tuesday a state of emergency in the Japanese capital Tokyo and in Osaka in addition to five other cities, explaining that seven cities will be subject to the state of emergency for a month, with his statement that his government will work to ensure the continuation of economic activity as possible and that it is working in At the moment, a stimulus package of 108 trillion yen ($ 990 billion) has been approved.

On the other hand, the markets are looking to the US economy to reveal inflation data with the release of the consumer price index, which may reflect a 0.3% contraction versus 0.1% growth in February, while the core reading of the index may show a slowdown in growth to 0.1% versus 0.2% in February, the annual reading of the index may show a slowdown in growth to 1.6% versus 2.3%, as a substantial annual reading may show a slowdown in growth to 2.3% versus 2.4%.

This comes before we witness later in the day the speech of the members of the Federal Open Market Committee, President of the Cleveland Bank, Federal Reserve Loretta Mister, who is expected to talk about maintaining economic health during the crisis through satellites, and Deputy Governor of the Federal Reserve, Randall Carls, who is scheduled That talks about the banking system at the University of Utah also via satellite.

In the same context, we followed yesterday, Thursday, Federal Reserve Governor Jerome Powell about the state economy via satellites at the Brookings Institution, through which he noted that unemployment rates may rise strongly temporarily and that there will be entities that need direct financial support, while stating that the reserve The Fed has the ability to lend, but it does not have the ability to spend.

Powell also noted yesterday that there are signs that the recovery may be robust when it happens, while addressing the fact that market conditions have generally improved following measures taken by the Federal Reserve, and this came in the wake of his assertion that the Federal Reserve still has enough room to Take more action and stimulus to support the world's largest economy.

Powell's comments came hours after the Federal Reserve suddenly announced that additional $ 2.3 trillion in loans would be provided to support the economy and that it was working to provide assistance to all families and workers in American companies of all sizes, explaining that the debt of high-yielding companies would be purchased in addition to supporting government spending As well as the debts of small companies.

It is noteworthy that the Federal Reserve revealed last Wednesday the minutes of the Federal Open Market Committee meeting held on March 15th that surprising meeting, which was the second in less than two weeks after the previous surprise meeting on the third of the same month, which approved the monetary policy makers at The Federal Reserve returns short-term benchmark interest rates to zero levels.

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 remained since 2008 until the meeting of 27-28 October 2015, after reducing them in the previous emergency meeting by 50 points The basis is between 1.50% and 1.75%, and this comes in the wake of the committee members cutting interest three times by 25 basis points in previous meetings last year.

The minutes of the meeting stated on Wednesday that the reduction decision is in effect from March 16, and that the Federal Open Market Committee will undertake repurchases of treasury bonds with at least $ 500 billion per month and mortgage-backed securities at least $ 200 billion per month, provided that Make these purchases at the appropriate speed to support the smooth performance of the stock market, treasury and mortgage market.

Otherwise, yesterday we followed the director of the American National Institute of Allergy and Infectious Diseases and the medical advisor to US President Donald Trump, that the number of deaths in America due to the virus (COVID-19) may be much lower than previous expectations, and it is reported that Trump noted Wednesday that he would like America's economy was opened up by the "big bang", but the death toll from the Corona virus outbreak must be on the slope first.

Technical analysis

Yesterday the dollar against the yen resumed its negative trades yesterday to exceed the MA 50 and settle below it, which supports the continuation of our bearish expectations during the upcoming sessions, paving the way for achieving our negative targets that start at 107.68 and extend to 106.44.

The stochastic is providing negative signs that support the chances of achieving the proposed targets, noting that the continuation of the expected decline requires stability below 109.20.

The expected trading range for today is between 107.40 support and 109.00 resistance

Expected trend for today: bearish