USDJPY analysis 01.05.2020

The US dollar fluctuated in a narrow range, which is slipping towards decline during the Asian session, to prepare for the third consecutive weekly losses 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 Friday by the US economy, the largest economy in the world.

At 06:03 am GMT, the US dollar pair fell against the Japanese yen by 0.12% to 107.05 levels compared to the opening levels at 107.18 after the pair achieved its lowest level during the trading session at 107.02, while it achieved its highest at 107.41.

On the Japanese economy, we have followed the release of the annual reading of the Tokyo Consumer Price Index, which showed slowing growth to 0.2% compared to 0.4% in the previous annual reading of last March, while the substantial annual reading of the same index, which excludes fresh food, showed a 0.1% contraction against growth 0.4% in March, worse than expectations for slowing growth to 0.1%.

This came before we witnessed the Bank of Japan unveiling the minutes of its one-day meeting that was shortened on April 27 as a precautionary measure against the spread of the Coronavirus, through which monetary policymakers at the Bank of Japan approved negative interest rates at 0.10%, which came Consistent with expectations at the time, with the timely disclosure of the Bank of Japan monetary policy statement, which reflected the Japanese central bank's further stimulus.

In order to reveal the final reading of the manufacturing PMI by Markit for Japan, the third industrialized country in the world, which showed that the contraction widened to 41.9 compared to the previous preliminary reading for April and expectations at 43.7 and against a contraction of 44.8 in March, otherwise, we have followed Last Monday, Bank of Japan Governor Haruhiko Kuroda expressed the Japanese central bank, moving forward in providing support to his country's economy.

On the other hand, markets are looking to reveal the final reading of the manufacturing PMI by Markit for the United States, which may reflect the stability of the contraction at $ 36.9, little changed from the initial reading of last month and compared to the contraction at 48.5 in March, before we witness By the US economy, the construction spending index reading showed that the decline has widened to 3.5%, compared to 1.3% in February.

This comes in conjunction with the disclosure also by the largest industrialized country in the world about the reading of the Institute of Industrial Supply index, which may show the breadth of deflation to 36.7 compared to 49.1 in March, as the reading of the Institute of Industrial Supply measured in prices may show the extent of deflation to what it valued 30.7 vs. 37.4, and we would like to point out, because the reading at a value of 50 or higher reflects a widening, while it's reading less than 50 indicates a contraction.

Otherwise, yesterday we followed the Federal Reserve's announcement of a new stimulus program to provide financing to citizens directly, and this came after the Federal Open Market Committee decision in the April 28-29 meeting to keep interest rates at between zero and 0.25%, which It came in line with expectations, and the members of the committee stressed that they are going forward to use all the tools of the Federal Reserve to support the American economy in these difficult times.

Technical analysis

The dollar against the yen provided positive trades to approach the pivotal resistance test 107.68, affected by the stochastic positivity, while the moving average 50 continues to press negatively on the price to support the continuation of the expected bearish trend scenario for the coming period, waiting for the decline to resume to attack the 106.44 level and open the way towards heading towards 105.20 as a station deification.

Therefore, we will maintain our bearish expectations unless the price rushes to breach 107.68 then 108.05 levels and stability above it.

The expected trading range for today is between 106.00 support and 108.00 resistance.

Expected trend for today: bearish.