USDJPY analysis 17.09.2020

The US dollar fluctuated in a narrow range that tends to rise during the Asian session, to witness its retracement of the second session from its lowest since late July, when it tested its lowest since March 12 against the Japanese yen following the disclosure of the monetary policy data of the Bank of Japan and the decisions and directions of the bank The Japanese central bank and on the cusp of economic developments and data expected today, Thursday, by the US economy, the largest economy in the world.

At 07:11 AM GMT, the US dollar against the Japanese yen rose by 0.06% to 105.01 levels compared to the opening levels at 104.95, after the pair achieved its highest level during the session's trading at 105.17, while it reached its lowest level at 104.88.

We have followed the decision of monetary policy makers at the Bank of Japan to keep interest rates negative at 0.10%, with the Bank of Japan unveiling the monetary policy statement and also staying on pledging to direct the yield of 10-year government bonds at zero and confirming that additional steps will be taken to facilitate Without hesitation, if necessary, attention is now focused on the press conference to be held by Bank of Japan Governor Haruhiko Kuroda.

It is noteworthy that the Japanese central bank adopted at an emergency meeting on May 22 last year, more stimulus, as it launched a new lending program through which it aimed to direct more money to small and medium-sized companies suffering from the economic blow of the outbreak of the coronavirus, with his statement at the time that He extended the deadline for a series of his recent measures to combat the fallout from the Coronavirus.

The Bank of Japan also announced in May that it would accelerate the purchase of corporate debt with a period of six months until the end of the current fiscal year 2020, and this comes on the heels of raising, in the April meeting, the limit for the purchase of corporate bonds and commercial securities that he pledged to purchase to 20 trillion. Japanese yen from 7 trillion Japanese yen previously, with his commitment at the time to buy unlimited amounts of government bonds.

We would like to point out that in April the Bank of Japan canceled the previous directive to buy it at an annual rate estimated at 80 trillion Japanese yen, as the monetary policy statement at the time included a paragraph, “The Bank of Japan will buy the necessary amounts of government bonds without setting an upper limit, so that it keeps the yield of bonds with a term 10 years at about zero hundred ", and attention is now focused on the actions of the Bank of Japan Governor Haruhiko Kuroda in Tokyo.

On the other hand, investors are currently awaiting the American economy for the release of the aid claims index reading for the past week on September 12th, which may reflect a decline of 59,000 requests to 825,000, compared to 884,000 in the previous weekly reading. The continuing aid for the past week, on the fifth of this month, decreased by 385,000 requests to 13.0 million, compared to 13.385 million.

This comes in conjunction with the disclosure of housing market data, with the release of the housing starts index and the building permit index reading, and amid expectations that the building permits reading will reflect an increase to about 1.51 million permits compared to about 1.50 million permits in July, while the home reading may clarify The start-up decreased to about 1.47 million homes, compared to about 1.50 million homes in July.

This also comes in conjunction with the disclosure by the largest industrial country in the world of industrial sector data with the release of the Philadelphia Industrial Index reading, which may reflect a contraction of the expansion to a value of 15.0 compared to 17.2 last August, and this comes hours after the end of the committee meeting. The Federal Reserve Open Market September 15-16, during which interest rates were kept between zero and 0.25%.

We would like to point out that the Federal Reserve revealed yesterday, after the meeting, the expectations of the members of the Federal Commission for growth rates, inflation and unemployment in addition to the future interest rates for the next three years, and it is reported that the Federal Reserve previously adopted several stimulus programs until the economy showed signs of recovery, on top of which is a purchase program Treasury bills at $ 80 billion a month and mortgage notes at least $ 40 a month.

In the same context, we also followed yesterday's press conference held by Federal Reserve Governor Jerome Powell, half an hour after the end of the meeting, to comment on the decisions and directions of the committee, which included expectations to stay the leader at zero levels until 2023, in which he expressed the importance of fiscal policy The stimulus package to support the economy, as it affirmed the Federal Reserve’s commitment to using all its tools to support the recovery.

Technical analysis

The dollar versus yen managed to break the 105.20 level and hold steady with a daily close below it, which supports the continuation of our bearish expectations in the short and medium-term, on its way to visit 103.65, which represents the next negative target.

The SMA 50 continues to press negatively on the price to support the downside expectations, which will remain valid as long as it is established below 105.20.

The expected trading range for today is between 104.40 support and 105.70 resistance.

The expected general trend for today: Bearish.