USDJPY analysis 11.06.2020

The fluctuation of the US dollar in a narrow range tilted to the upside during the Asian session to witness its rebound from the lowest since May 15 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 Thursday by the US economy the largest economy In the world.

At 06:07 am GMT, the US dollar pair rose against the Japanese yen by 0.01% to 107.13 levels compared to the opening levels at 107.12 after the pair achieved its highest level during the trading session at 107.23, while achieving the lowest at 106.90.

We have followed about the Japanese economy, the third largest economy and the third largest industrialized country in the world. The Bank of Japan revealed the manufacturing business statistics, which showed that the deflation widened to 52.3 compared to 17.2 in the first quarter, worse than the expectations that indicated that the deflation widened to a value of 20.5, The business sector statistic for the whole industry also showed that the contraction widened to 47.6 compared to 10.1 in the first quarter.

On the other hand, investors are currently awaiting by the US economy the issuance of the index of subsidy requests for the last week on the fifth of this month, which may reflect a decline of 327 thousand applications to 1,550 thousand applications compared to 1,877 thousand requests in the previous reading, as may appear the reading of ongoing subsidy requests Last week, on May 29, it decreased by 1,487 thousand requests to 20,00 thousand requests compared to 21,487 thousand requests.

This comes in conjunction with the release of the producer price index, which is an initial indicator of inflation, which may reflect 0.1% growth versus a 1.3% contraction last April, while a substantial reading of the same indicator may show contraction shrinking to 0.1% versus 0.3%, and the annual reading may appear The index has the contraction stable at 1.2%, little changed from the previous annual reading, while the substantial annual reading may reflect slowing growth to 0.4% compared to 0.6%.

Other than that, yesterday we followed the expiry of the two-day FOMC meeting, during which the Federal Reserve monetary policy makers kept the interest on federal funds at between zero and 0.25% for the second meeting in a row, which came in line with expectations And, with the disclosure of the expectations of the members of the Committee to the rates of growth, inflation and unemployment in addition to the future interest rates for the next three years.

This has included expectations of members of the Federal Committee to stay on interest rates at zero levels until 2022 and that the US economy may contract 6.5% during 2020 and that unemployment rates may reach 9.3% by the end of the year before falling to 6.5% in 2021 and 5.5% in 2022, and came Hours after the CPI reading showed inflation contracted for the third consecutive month in May to reflect the longest deflation period ever.

We also followed yesterday, Wednesday, the press conference held by Federal Reserve Governor Jerome Powell to comment on the decisions of the Federal Committee, through which he emphasized the Federal Reserve’s commitment to using all tools to support the American economy in light of the current challenges to achieve the goal of inflation, price stability and access to optimal exploitation of the labor market, explaining Coronavirus has caused extensive health and economic damage in America and abroad.

Powell pointed out that the coronavirus and the measures that were adopted to limit its spread and specifically the closure of economies had a negative impact on economic activity and led to high unemployment, with his discussion that weak domestic demand and low oil prices have a negative impact on inflation, adding that the continuation of the current crisis will harm economic activity More employment, in addition to inflation in the short term, will reflect negatively on the economic outlook for the medium term.

Technical analysis

The dollar versus the yen achieved a clear breakout of the level of 107.68 and settled below it, to activate the negative scenario on the intraday basis, on the way to visit the 106.44 level as a next negative station.

Therefore, a bearish bias will be favored for today, noting that breaching the mentioned level will extend the descending wave to reach 105.20, while the expected decline will remain if the price cannot breach 107.68 and hold above it again.

The expected trading range for today is between 106.10 support and 107.70 resistance.

Expected trend for today: bearish.