USDJPY analysis 26.05.2020

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 in the wake of the lifting of the state of emergency in Japan and on the cusp of developments and economic data expected today by the American economy and amid the aspiration to the Japanese government's adoption for more Of stimulus later this week.

At 06:05 am GMT, the US dollar pair rose against the Japanese yen by 0.12% to 107.84 levels compared to the opening levels at 107.71 after the pair achieved its highest level during the trading session at 107.92, while achieving the lowest at 107.68.

We have followed on from the Japanese economy the annual reading of the services price index, which showed that growth slowed to 1.0% compared to 1.6% last March, worse than expectations at 1.3%, and this came before we witnessed the disclosure of industrial sector data with the release of an overall index reading Industrial activities, which showed a widening decline to 3.8% compared to 0.7% last February, beating expectations that indicated a decline of 3.9%.

Up to the Bank of Japan’s disclosure of the core annual CPI reading which showed 0.1% contraction versus 0.1% growth in the previous annual reading for March, contrary to expectations for stability at zero levels, and that comes hours after Japanese Prime Minister Shinzo Abe announced On lifting the state of emergency in his country, explaining that Japan was able to control the epidemic of coronavirus.

This came, hours after the report, which touched upon the fact that the Japanese government is 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 started in early April, as part of record spending plans of $ 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 Corona Virus. It is expected that the Japanese government will agree during the cabinet meeting tomorrow, Wednesday, on this additional budget, which It will also include support to help companies pay rent and wages when business closes.

On the other hand, investors are anticipating the US economy to disclose housing market data with the release of the house price index, which may explain the slowdown in growth to 0.6% compared to 0.7% last February, in conjunction with the release of the annual reading of the house price index, which may appear Also, growth slowed to 3.4% from 3.5% in February.

This comes before the release of the new home sales index, which may explain the decline in the decline to 15.4% for 492 thousand homes compared to 21.9% at 627 thousand homes in March, in conjunction with the disclosure of the consumer confidence index reading, which may reflect a widening to 87.1 compared to 86.9 In April, they reached the participation of Federal Reserve Board member and Minneapolis Federal Reserve Chairman Neil Kakkari in a panel discussion on the Corona Virus pandemic.

Technical analysis

The dollar versus the yen got a positive close above 107.68 despite the recent weak trading, which supports the continuation of the expected upside scenario in the intraday basis, regular within the bullish channel that appears in the picture, which targets the level of 109.22 as the next main station, while recalling the importance of stability above 107.35 to continue Expected rise.

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

Expected trend for today: bullish