JPYUSD analysis 21.05.2020

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 about the Japanese economy and on the cusp of developments and economic data expected Thursday by the US economy, the largest economy in the world, which includes the talk of members of the Federal Committee for the open market via satellite Industrial led by Federal Reserve Governor Jerome Powell.

At exactly 05:57 AM GMT, the US dollar pair rose against the Japanese yen by 0.14% to 107.68 levels compared to the opening levels at 107.53 after the pair achieved its highest level during the trading session at 107.75, while achieving the lowest at 107.50.

On the Japanese economy, we have followed the release of the Trade Balance Index reading, which showed a deficit of 930 billion yen against a surplus of 5.4 billion yen in March, worse than the expectations that indicated a surplus of 67 billion yen, while the seasonally adjusted reading of the same indicator showed that the deficit widened to 996 billion yen Against 381 billion yen in March, also worse than expectations that the deficit widened to 650 billion yen, with the expansion of exports and imports last month.

This came before we witnessed the disclosure of the initial reading of the manufacturing PMI by Markit on Japan, which showed the contraction widened to 38.4 compared to 41.9 in April. Otherwise, we followed yesterday. Japanese Minister of Economy Yasutoshi Nishimura expressed that his country is on the right path to contain Coronavirus has spread, while tourism has not yet reached the stage of a resurgence, and the sector has recovered from activity.

Also, the Japanese Economy Minister Nishimura noted that the Japanese government is following the data received at the present time before it made its decision regarding lifting the state of emergency in the remaining regions of his country. It is noteworthy that the Japanese government announced last week to lift the state of emergency in 39 of the 47 regions in Japan, in the wake of data from these regions showing positive signs of containing the outbreak of coronavirus there.

We would like to point out, because the Bank of Japan announced last Tuesday its intention to hold an emergency meeting tomorrow, Friday, through which monetary policymakers 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 last month. The maximum purchase limit for corporate and commercial securities that he pledges to purchase 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, investors are currently awaiting by the US economy the release of the aid claims index for the last week on May 15, which may reflect a decline of 581 thousand applications to 2,400 thousand applications compared to 2,981 thousand requests in the previous reading, while the reading of subsidy applications may appear Continuing for the last week on the eighth of this month, increasing by 1,932 thousand requests to 24,765 thousand requests compared to 22,833 thousand requests.

This comes in conjunction with the disclosure by the largest industrialized country in the world of industrial sector data with the release of the Philadelphia Industrial Index reading, which may reflect the contraction to 40.0 compared to 56.6 last April, and before we witness the disclosure of the initial reading of the manufacturing PMI Markit is for the United States, which may reflect a contraction of shrinkage to 39.3 compared to 36.1 in April.

It also revealed the initial reading of the Services PMI that may reflect the contraction in value to 32.6 compared to 26.7 in April, before the release of the leading indicators, which may explain the decline in the decline to 5.5% compared to 6.7% last March, in conjunction with The release of the Existing Home Sales Index, which may explain the widening decline to 18.9% to 4.31 million homes compared to 8.5% at 5.27 million homes in April.

All the way to FBI members ’satellite talk, New York Fed President John Williams at the Greater Rochester Chamber of Commerce and Federal Reserve Governor Richard Clarida’s views of the US economic outlook and monetary policy at the New York Business Economics Association, before we witness the introduction of the Fed’s governor Jerome Powell introductory notes about Coronavirus at a federal event

Technical analysis

The dollar versus the yen was exposed to negative pressure to break the level of 107.68 and settle below it, but we notice that the price was based on the support of an intraday bullish channel that appears in the image, and the moving average 50 meets with the support of this channel to protect the trades within it, in conjunction with the emergence of positive crossover signs through the stochastic indicator.

Thus, these factors encourage us to favor the bullish trend today, noting that our next main target is 109.22, while a break of 107.35 is a negative factor that will pressure the price to achieve further decline and target the level of 106.44 before any new attempt to rise.

The expected trading range for today is between 107.00 support and 108.60 resistance.

Expected trend for today: bullish.