USDJPY analysis 28.04.2020

The US dollar fluctuated in a narrow range slanting to a downward trend during the Asian session against the Japanese yen following the developments and economic data that it followed from the Japanese economy and on the cusp of developments and economic data expected today by the American economy, which includes the launching of the activities of the Federal Open Market Committee meeting in Washington.

At 06:04 am GMT, the US dollar pair fell against the Japanese yen by 0.05% to 107.20 levels compared to the opening levels at 107.25 after the pair achieved its lowest level during the trading session at 107.19, while it achieved its highest at 107.34.

We have followed the Japanese economy on the disclosure of labor market data with the release of the unemployment rate reading, which showed an increase to 2.5%, in line with expectations, compared to 2.4% last February. This came before we witnessed the Bank of Japan’s disclosure of the annual core reading of the CPI which showed that growth slowed to 0.1% compared to the previous annual reading for February and expectations at 0.2%.

This comes hours after the central bank's monetary policymakers decided at the April 27 meeting, which was shortened for one day as a precautionary measure against the spread of the Coronavirus, to maintain short-term reference interest rates at 0.10%, which came in line with expectations, And with the disclosure of the Bank of Japan monetary policy statement, which reflected the Japanese central bank's further stimulus.

In the same context, yesterday, the monetary policy statement indicated that the monetary policymakers of the Bank of Japan raised the ceiling for the purchase of corporate and commercial securities that it pledges to purchase to 20 trillion yen from 7 trillion yen in advance, as well as the Japanese central bank’s commitment to purchase unlimited quantities. Of government bonds by canceling the previous purchase guidance at an annual pace of about 80 trillion yen.

The central bank’s monetary policy statement included a paragraph, “The Bank of Japan will purchase the necessary amounts of government bonds without setting an upper limit, so that the yield of 10-year bonds will remain at around zero percent.” This came before we also witnessed yesterday the press conference held by Bank of Japan Governor Haruhiko. Kuroda in Tokyo, through which he stressed that the Japanese central bank is moving forward in providing support to the third-largest economy in the world.

On the other hand, investors are currently awaiting by the US economy the release of the merchandise trade balance index, which may explain the deficit shrinking to $ 55.0 billion compared to $ 59.9 billion last February, in conjunction with the disclosure of the initial reading of the wholesale inventory index, which may Reflect the contraction of the decline to 0.4% compared to 0.7% in February.

This comes before the annual reading of the house price index, which may show stable growth at 3.1% during February, and the disclosure by the largest industrialized country in the world of industrial sector data with the release of the Richmond Industrial Index, which may reflect a contraction of 41 versus a widening of 2 in March. Last March, in conjunction with the release of the consumer confidence index, which may show a shrinkage of expansion to 88.3 compared to 120.0 in March.

In another context, investors are awaiting later in the day for the launch of the FOMC meeting, April 28-29, in which it is expected that the benchmark interest rates will remain at zero levels between 0.25% and before we witness After tomorrow, Wednesday, the press conference holders will be held by Federal Reserve Governor Jerome Powell, half an hour after the meeting ends.

We would like to point out, that the Federal Reserve monetary policymakers adopted at the previous Federal Open Market Committee meeting held on March 15th that surprising meeting, which was the second in less than two weeks after the previous sudden meeting on the third of the same month, to return interest on Federal funds to zero levels while reducing interest rates at the time by 100 basis points from between 1.00% and 1.25%.

Technical analysis

The price of the pair in yesterday's trading maintained its stability below the level of 117.65, to form an additional barrier to negative trades, and to facilitate the task of gathering the additional negative momentum, and we note that its infiltration is currently around 115.95.

The foregoing, supports the negative continuity, so we should wait for the price to continue to fall until recording the main targets, which are concentrated at 114.70 and 114.25, respectively.

The expected trading range for today is between 116.65 and 114.70.

Expected trend for today: bearish.