USDJPY analysis 10.06.2020

The US dollar fell during the Asian session to witness its rebound to the fourth session from its top since March 26 against the Japanese yen after the developments and economic data that it had reported on the Japanese economy and on the cusp of developments and economic data expected on Wednesday by the US economy, which includes the activities of the Federal Market Committee meeting Open and upcoming press conference of Federal Reserve Governor Jerome Powell.

At exactly 05:52 AM GMT, the US dollar pair fell against the Japanese yen by 0.32% to 107.42 levels compared to the opening levels at 107.75 after the pair achieved its lowest level since the beginning of June at 107.41, while it achieved its highest during the trading session At 107.87.

We have followed about the Japanese economy, the third largest economy in the world and the third largest industrialized country globally, to disclose the reading of the machinery orders index, which showed the widening of the decline to 12.0% compared to 0.4% last March, worse than the expectations that indicated a decline of 7.5%, as she explained The annual reading of the same index expanded the decline to 17.7% compared to 0.7%, also worse than expectations that indicated the decline of 14.0%.

This came in conjunction with the disclosure of inflation data with the release of the producer price index, which is a preliminary indicator of inflationary pressures, which showed contraction contracted to 0.4% compared to 1.5% last April, worse than expectations that indicated deflation to decline to 0.3%, while the reading indicated The annualized index for the same index expanded to 2.7% compared to the previous annual reading for April and expectations for 2.4%.

On the other hand, investors are anticipating the US economy to disclose inflation data with the release of the CPI reading that may show stability at zero levels versus a 0.8% contraction in April, as the fundamental reading of the index may show stability at zero levels versus a 0.4% contraction, and the annual reading of the index may reflect the slowdown in growth to 0.2% versus 0.3%, as the substantial annual reading may show 1.3% versus 1.4%.

This comes in conjunction with the actual meeting of the Federal Committee for the Open Market via satellite in Washington, which is expected to remain on the short-term reference interest rates for the second meeting at between zero and 0.25%, in conjunction with the disclosure of the Federal Committee data and the expectations of the members of the Committee for growth rates Inflation and unemployment as well as the future of interest rates for the next three years.

Up to the press conference to be held by Federal Reserve Governor Jerome Powell half an hour after the FOMC meeting ended to comment on the decisions of the Federal Reserve monetary policy makers who recently adopted several stimulus programs until the economy showed signs of recovery, led by the Treasury bond purchase program At $ 500 billion a month and mortgage bonds at least $ 200 a month.

Other than that, we followed earlier this week the World Bank revealed its expectations for the performance of the global economy during the current year 2020, which indicated a global economic contraction of 5.2% in 2020 due to the Coronavirus compared to previous expectations of growth of 2.5%, with the indication that the global economic recession will be the largest in the year 1945 in the aftermath of World War II, depending on per capita gross domestic product.

The World Bank’s expectations at the time also included that the major economies may witness a 7% contraction in 2020, amid expectations that the US and Japanese economies will contract 6.1% and the eurozone economies will grow 9.1% this year, but they may recover next year 2021 and achieve 3.9% growth, and the World Bank favored the province of China On a positive growth of 1% during the current year, while the Indian economy may witness a contraction of 3.2% in 2020 and the Brazilian economy may witness a contraction of 8%.

Technical analysis

The dollar against the yen presented more negative trades yesterday to settle at 107.68, and the day begins with an additional bearish tendency to move below this level, which provides signs of the price heading to the downside, but we prefer stopping on the neutral until the price confirms the closing of the daily candle in relation to the mentioned level.

We point out that stability below 107.68 will push the price to achieve further decline and visit the 106.44 level as the next main target, while the consolidation above it represents the key to resuming the bullish direction whose first target is at 109.22.

The expected trading range for today is between 106.70 support and 108.50 resistance

Expected trend for today: neutral