JPYUSD analysis 18.05.2020

The US dollar fluctuated in a narrow range tilted to the upside during the Asian session against the Japanese yen following the developments and economic data that is reported on the Japanese economy and the interview conducted by Federal Reserve Governor Jerome Powell with the program "60 Minutes" on "CBS" and on the cusp of developments and data The expected economic Monday by the US economy and amid market pricing for measures to gradually reopen the US economy and some other global economies and return to normalcy after efforts to contain the outbreak of the Coronavirus.

At exactly 06:30 am GMT, the US dollar pair rose against the Japanese yen by 0.13% to 107.20 levels compared to the opening levels at 107.15 after the pair achieved its highest level during the trading session at 107.28, while achieving the lowest at 107.04, knowing that The pair started the trading session on an upward price gap after it concluded the trading last week at 107.06 levels.

We have followed on from the Japanese economy the release of the seasonally adjusted preliminary reading of the GDP index, which showed contraction shrinking to 0.9% compared to 1.8% in the fourth quarter, surpassing expectations that indicated contraction shrinking to 1.1%, while the preliminary annual reading of the same indicator measured in prices showed Growth slowed to 0.9% versus 1.2% in the fourth quarter, also beating expectations for slowing growth to 0.7%.

This came before we also witnessed by the second-largest economies of Asia and the third-largest economy in the world after both the United States and China, the disclosure of industrial sector data for the third-largest industrial country in the world with the release of the reading of the Terratari industrial index, which showed the widening of the decline to 4.2% compared to 0.7% Last February, it was worse than expectations, which indicated that the decline would extend to 3.6%.

On the other hand, we have followed the warning of Federal Reserve Governor Jerome Powell in the "60 Minutes" program that the economic downturn may continue until late 2021, explaining that his country's economic downturn may reach between 20% and 30% "easily" during the current quarterly quarter. With the outbreak of the Coronavirus, and adding that he expects "the economy to recover steadily during the second half of this year," as long as America avoids "the second wave of the virus."

Powell noted that "it is very important to avoid this. Because it will be damaging to the economy and also to the confidence of the public," explaining that "assuming there is no second wave of the virus, I think you will see the economy recover steadily during the second half," adding that "in order for the economy to fully recover A vaccine must wait, "Powell also called on US lawmakers to pass more economic incentives and relief aid, while telling him that unemployment rates could peak at 25%.

Otherwise, investors are currently waiting for the US economy to reveal the housing market data with the release of the housing index reading by the National Association of Home Builders, which may reflect a rise to $ 35 compared to 30 last April, and we would like to point out that the Democrats passed last Friday In the House of Representatives a stimulus of $ 3 trillion, but it is not expected that the stimulus will pass the Republican-controlled Senate.

Technical analysis

The dollar versus the yen continues to fluctuate between the sides of the sideways range represented by the support 106.44 and the resistance 107.68, and therefore, there is no change in our expectations of the sideways domination of the intraday trading until the price succeeds in penetrating one of these two levels to clearly define the following targets.

We point out that the breach of the mentioned support will pressure the price to visit the 61.8% Fibonacci correction level at 105.19 directly, while breaching the resistance will enable the price to start recovery attempts aimed at testing the 109.22 level initially.

The expected trading range for today is between 106.30 support and 108.00 resistance.

Expected trend for today: sideways.