USDJPY analysis 25.05.2020

The US dollar fluctuated in a narrow range tilted to the upside during the Asian session against the Japanese yen after the report that it adopted earlier this week, which touched on the Japanese government's intention to adopt more stimulus to face the negative economic repercussions of the Corona outbreak and amid the scarcity of economic data on Monday by the US economy due to Anniversary Day in the United States.

At exactly 6:15 am GMT, the US dollar pair rose against the Japanese yen by 0.12% to 107.72 levels compared to the opening levels at 107.59 after the pair achieved its highest level during the trading session at 107.78, while achieving the lowest at 107.57, knowing that The pair started the trading session on a falling price gap after it concluded the trading last week at 107.64 levels.

The Japanese government may lift the state of emergency in Tokyo today as part of the measures to lift the state of emergency inside Japan that was initiated by Japanese Prime Minister Shinzo Abe earlier this month. It is reported that Abe announced on May 14 that the state of emergency was lifted in 39 areas of origin 47 regions in Japan, and eight regions remained at the time, including Tokyo, Osaka and Hokkaido. The state of emergency is expected to be lifted in those areas by the end of this month.

Abe warned in advance of the possibility of a second wave of corona's outbreak, and Japanese Economy Minister Yasutoshi Nishimura expressed last week his expectations for a second wave to follow later, pointing to the importance of his country making all efforts to make this wave lighter, and noted by Japanese Finance Minister Taro Aso Friday That it will not be sufficient to contain the virus in his country only, but it must be contained globally, and without that, the recovery of exports and tourism will be very difficult.

Other than that, we followed the report that touched upon the Japanese government considering adopting a new stimulus package worth 100 trillion yen ($ 929 billion) that will mostly consist of the financial aid program for companies that were affected by the Corona pandemic, and it is expected that the package will be funded with a second additional budget for the fiscal year that It started in early April, as part of record spending plans worth $ 1.1 trillion to mitigate the negative economic consequences of the virus.

It is expected that the additional budget of the Japanese government will include 60 trillion yen to expand the loan program provided by state and private financial institutions to Japanese companies affected by the repercussions of the outbreak of the CoronaVirus, and it is expected that the Japanese government will agree during the cabinet meeting tomorrow, Wednesday, on this additional budget It will also include support to help companies pay rent and wages when the business closes.

This comes hours after the Bank of Japan's monetary policymakers decided last Friday at the May 22 emergency meeting, which was held for one day as a precaution against the spread of Corona, to keep interest rates negative at 0.10%, which came in line with expectations at the time, with Also, remain committed to directing the 10-year government bond yield to zero.

In the same context, the Central Bank of Japan revealed on Friday the monetary policy statement, which reflected the Bank of Japan's offer of further stimulus with the launch of a new lending program aimed at channeling more money to small and medium-sized companies that suffer from the economic blow to the outbreak of the coronavirus, while stating that The deadline has been extended for a series of recent actions he has taken to combat the consequences of the Coronavirus.

The Bank of Japan announced at that time that it would accelerate the purchases of corporate debts with a six-month period until the end of the current fiscal year on March 31, 2021, with his statement that the response measures to the virus totaled to 75 trillion yen, and this comes in the wake of the Bank of Japan raising in Last April's meeting, the maximum purchase limit for corporate and commercial securities that it pledges to purchase is 20 trillion yen from 7 trillion yen previously.

It is reported that the Japanese Central Bank also confirmed 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, as the monetary policy statement included at that time a paragraph, "The Bank of Japan will purchase the necessary amounts of government bonds without Set a maximum limit so that the yield of 10-year bonds remains at about zero percent.

On the other hand, investors expecting later this week by the US economy to disclose the second reading of the GDP index, which may confirm the contraction of the largest economy in the world by 4.8%, as the previous preliminary reading showed and against a growth of 2.1% in the fourth quarter, while The second reading of the same index, measured in prices, may confirm a growth of 1.3% as well, with little change from what it was in the previous reading for the fourth quarter.

In another context, markets are also awaiting by the end of the week the upcoming talk of Fed Governor Jerome Powell at the Griswold Center for Economic Policy Studies at Princeton University in New Jersey, where he is expected to participate in a hypothetical satellite panel discussion, and we would like to point out that Powell Noah Thursday The past is that the Fed will spare no effort until the US economy recovers from the fallout from the Coronavirus.

Technical analysis

The dollar versus the yen is making continuous attempts to breach the 107.68 level and maintains its stability inside the bullish channel that appears in the picture, while the EMA50 provides continuous positive support for the price.

Thus, these factors encourage us to continue to suggest the bullish trend for the upcoming period, whose next main target is at 109.22, noting that a break of 107.35 will stop the suggested rise and press the price to test the 106.44 level initially.

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

Expected trend for today: bullish.