JPYUSD analysis 12.10.2020

The US dollar fluctuated in a narrow range that tends to decline during the Asian session, to witness its retracement of the third session from its high since September 14 against the Japanese yen, following the developments and economic data that were followed on Monday by the Japanese economy and amid the scarcity of economic data early this week before. The American economy is the largest in the world due to the Columbus Day holiday in the United States of America.

At exactly 06:58 am GMT, the US dollar against the Japanese yen fell by 0.21% to 105.48 levels compared to the opening levels at 105.70, after the pair achieved its lowest level since the fifth of this month at 105.43, while the pair achieved its highest level during trading The session is at 105.85, knowing that the pair started the session with a rising price gap after closing last week's trading at 105.62.

We have followed up on the Japanese economy the release of the producer price index reading, which is a preliminary indicator of inflationary pressures, which showed a contraction of 0.2% against a growth of 0.2% last August, contrary to expectations that indicated stability at zero levels, while the annual reading of the same index showed the expansion of the deflation to 0.8% versus 0.6% in August, worse than expectations for a contraction of 0.5%.

This came in conjunction with the disclosure of the machinery orders index reading, which showed a slowdown in growth to 0.2% compared to 6.3% last July, surpassing expectations that indicated a decline of 1.0%, while the annual reading of the same index showed a contraction of the decline to 15.2% compared to 16.2%. It also beats expectations that indicated a decline of 15.6%, and also in conjunction with the annual reading of the bank lending index showed that growth slowed to 6.4%, compared to 6.7% in August.

Technical analysis

The dollar against the yen is facing negative pressure after it found it difficult to stabilize above the 106.00 barrier, and we note that recent trades are confined to a rising wedge pattern that is expected to pressure the price to achieve further decline during the upcoming sessions, as the price is making attempts to break this pattern's support at 105.55. Noting that breaking this level will threaten the pivotal support 105.20 and cause it to be broken, thus paving the way for further decline in the coming period.

From here, we expect to witness negative trading in the intraday term, confirming the breach of 105.55, and the main targets start at 104.40 and extend to 103.65, bearing in mind that failure to achieve the required break will push the price to recover again and head towards 106.44 initially.

The expected trading range for today is between 104.90 support and 106.00 resistance.

The expected general trend for today: Bearish.