USDJPY analysis 19.05.2020

The US dollar fluctuated in a narrow range tilted to the upside during the Asian session against the Japanese yen after the developments and economic data that it followed on the Japanese economy and on the cusp of developments and economic data expected today by the American economy, the largest economy in the world, which includes the testimony of the Federal Reserve Governor Jerome Powell and the Minister American Treasury Stephen Manuchin before the Senate in Washington.

At exactly 05:51 am GMT, the US dollar pair rose against the Japanese yen by 0.06% to 107.40 levels compared to the opening levels at 107.33 after the pair achieved its highest level during the trading session at 107.46, while achieving the lowest at 107.30, knowing that The pair started the trading session on a falling price gap after it concluded yesterday's trading at 107.34 levels.

On the Japanese economy, we have followed the disclosure of industrial sector data with the release of the final reading of industrial production, which showed a steady decline at 3.7%, unchanged from the previous initial reading for the month of March, in line with expectations and against a decline of 0.3% last February, while The annual reading of the same index showed that the decline decreased to 5.2% compared to 5.7%, and the reading of the rate of energy utilization reflected the expansion of the decline to 3.6% compared to 1.8%.

On the other hand, the markets are currently looking to the US economy to reveal the housing market data with the release of both the beginning construction index and the building permit index and amid expectations that building permits will reflect the widening of the decline to about 1.00 million permits compared to about 1.35 million permits in March In the past, the readings for homes that have been built may also reflect a widening decline to about 0.95 million homes compared to about 1.22 million homes in March.

This comes hours after Powell warned last Sunday 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 a virus epidemic. Corona, explaining that he expected "the economy to recover steadily during the second half of this year," as long as America avoids "the second wave of the virus."

Powell then noted that "it is very important to avoid this. It will be devastating to the economy and public confidence," adding that "assuming there is no second wave of the virus, I think you will see the economy recover steadily during the second half," explaining 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%.

In the same vein, Powell has guided that the Federal Reserve has adopted many stimulus measures and still has more tools, explaining that there is much that the Federal Reserve can do to support the economy, adding that the Federal Reserve is committed to doing everything in its power as long as necessary. This excludes the Federal Reserve's resort to pushing the interest on federal funds into negative territory.

Other than that, the markets are also looking later in the day to the events of the G-7 (America, UK, Japan, Germany, France, Italy and Canada) meeting that is scheduled to discuss measures to mitigate the negative economic repercussions of the Coronavirus outbreak, via satellite Industrialization, and this comes in conjunction with measures to gradually reopen the US economy and many other global economies and return life to normal.

Technical analysis

The dollar versus the yen did not show any strong movement in the previous sessions, to continue to move within the sideways range that appears in the picture, between 106.44 support and 107.68 resistance, to keep the lateral inclination intact on the intraday basis, waiting for one of these levels to be surpassed to determine the next direction more precisely.

The discrepancy between SMA 50 positivity and stochastic negativity provides another reason for sideways fluctuation, noting that details of the expected targets from breaching the above-mentioned levels are explained in our previous report.

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

Expected trend for today: sideways.