JPYUSD analysis 20.05.2020

The fluctuation of the US dollar in a narrow range tilted to the up during the Asian session against the Japanese yen after the developments and economic data that were followed by the Japanese economy and on the cusp of developments and economic data expected today by the US economy, the largest economy in the world, which includes the disclosure of the minutes of the Federal Open Market Committee meeting Held at the end of last month.

At 05:50 am GMT, the US dollar pair rose against the Japanese yen by 0.04% to 107.75 levels compared to the opening levels at 107.71 after the pair achieved its highest level during the trading session at 107.98, while achieving the lowest at 107.66.

We have followed about the Japanese economy, the third largest economy in the world and the third largest industrialized country globally, to reveal the reading of the machinery orders index, which showed a 0.4% decline compared to a rise of 2.3% last February, surpassing expectations that indicated a decline of 6.8%, while the reading showed The annual index for the same index decreased the decline to 0.7% compared to 2.4%, also outperforming the expectations that indicated the expansion of the decline to 9.5%.

This comes hours after the Bank of Japan announced its intention to hold an emergency meeting next Friday, during which monetary policy makers at the Bank of Japan are expected to keep interest rates negative at 0.10% and provide more stimulus, after the Bank of Japan raised the limit last month. The maximum purchase of corporate bonds and commercial securities he pledges to buy is 20 trillion yen from 7 trillion yen in advance.

The Bank of Japan also announced at the end of last month its commitment to purchase unlimited amounts of government bonds by canceling the previous directive to purchase them at an annual rate of about 80 trillion yen, stating at the time that “the Bank of Japan will purchase the necessary amounts of government bonds without setting a higher limit, so that it remains 10-year bond yield at about zero percent.

On the other hand, markets are currently awaited by the US economy, as the Federal Reserve revealed the minutes of the Federal Open Market Committee meeting held on April 28-29, in which it decided to stabilize interest on federal funds at zero levels between zero and 0.25%. , Which came in line with expectations at the time, amid stressing the way forward in using all tools to support the American economy in these difficult times.

It is reported that members of the Federal Committee expressed at the end of last month that the outbreak of the Coronavirus had caused human and economic suffering within the United States and abroad and that the preventive measures adopted by countries globally weigh on economic activity and that the decline in demand and the collapse of oil prices reduce inflationary pressures, while benefiting That this health crisis will broadly affect economic activity and the labor market as well as inflation.

The members of the Federal Committee also mentioned at the time that interest rates are expected to remain at zero levels to support the flow of credit to families and companies, and that the Federal Reserve is moving forward in purchasing treasury bonds at $ 500 billion per month and mortgage bonds at least $ 200 per month, when the economy showed signs of Recovery in the wake of overcoming the current crisis and achieving price stability in addition to an improvement in the labor market.

The Federal Committee also stated at the time that it would continue to follow economic data and data related to health care and global developments and assess the current and expected conditions within its work to reach the goal of inflation at two percent and achieve the maximum benefit in the labor market, adding that it will monitor the market conditions closely and is ready to amend its tools if What is needed.

Otherwise, yesterday we followed the statement of Federal Reserve Governor Jerome Powell and US Treasury Secretary Stephen Manuchin before the Senate Satellite Banking, Housing and Urban Affairs Committee, and Powell emphasized that the Federal Reserve will keep interest rates at zero levels until recovery Economy and achieving the goal of inflation, and he is committed to using all his tools to support the economy in this difficult period.

Technical analysis

The dollar versus the yen made a breach through the level of 107.68 and closed the daily candle above it, to get out of the sideways range that dominated the recent trading and activate the bullish trend scenario on the intraday basis, on its way to head towards 109.22 as a next positive target.

Therefore, the bullish bias will be likely for the upcoming sessions, taking into consideration that breaking 107.68 and holding below it will stop the expected rise and put the price under negative pressure targeting mainly 106.44 areas.

The expected trading range for to day is between 107.00 support and 108.60 resistance

Expected trend for today: bullish.