JPYUSD analysis 22.09.2020

The US dollar fluctuated in a narrow range tilted towards a decline during the Asian session, to reflect the resumption of the marches of losses that stopped yesterday for the first time six sessions against the Japanese yen amid scarce economic data at the beginning of this week by the Japanese economy due to the holiday for the Day of Respect for the Elderly yesterday and the holiday of the Autumn Equinox today. Tuesday in Japan, and on the cusp of economic developments and data anticipated by the US economy, the largest economy in the world, which Fed Governor Jerome Powell testified before Congress.

At 06:56 AM GMT, the US dollar against the Japanese yen fell by 0.11% to 104.54 levels compared to opening levels at 104.65, after the pair achieved its lowest level during the session’s trading at 104.46, while it achieved its highest at 104.75.

Investors from the US economy, the largest industrial country in the world, are awaiting the release of the Richmond Industrial Index, which may reflect a contraction of the expansion to a value of 12 versus 18 in August, in conjunction with the disclosure of housing market data with the release of the annual home price index reading, which may Growth slowed down to 2.4% to about 6.05 million homes, compared to 24.7%, at 5.86 million homes in July.

This comes before we witness the first half of the semi-annual testimony of Federal Reserve Governor Jerome Powell before the US Congress, specifically before the House Financial Services Committee in Washington on the "CARES" Act, and Powell is expected to testify before the House Select Committee tomorrow. Wednesday, about the economic effects of the Corona pandemic, before he gave the second half of his testimony, tomorrow, Thursday, to the Senate Banking Committee.

We would like to point out that Treasury Secretary Stephen Mnuchin will also deliver his testimony on Thursday, with Powell, about the CARES Act before Congress. The repercussions of the Corona pandemic, with his assertion that there is a need for more fiscal and monetary policy to prevent the health crisis from causing long-term damage to the economy.

It is reported that the Federal Open Market Committee meeting held last week on September 15-16, during which interest rates were kept between zero and 0.25%, the program to purchase Treasury bonds by $ 80 billion per month and mortgage bonds by $ 40. At least monthly, with the disclosure at the time of the expectations of members of the Federal Commission for growth rates, inflation and unemployment, in addition to the future of interest rates for the next three years.

In the same context, we followed last Wednesday the press conference held by Federal Reserve Governor Powell after the end of the meeting to comment on the decisions and directions of the committee, which included expectations to remain the leader at zero levels until at least 2023, in which Powell expressed the importance of the fiscal stimulus policy to support the economy Amidst confirming the Fed’s commitment to using all its tools to support the recovery.

Technical analysis

The dollar against the yen provided positive trading yesterday, approaching the 105.00 barrier, noting that the stochastic indicator lost its positive momentum to reach overbought areas, waiting for the price to stimulate the resumption of the expected downside trend in the intraday and short term, which mainly targets 103.65.

Thus, the bearish trend scenario will remain effective unless the price rallies to breach 105.20 and build above it.

The expected trading range for today is between 103.50 support and 105.00 resistance.

The expected general trend for today: Bearish.