USDJPY analysis 29.10.2020

The US dollar fluctuated in a narrow range that tends to rise during the Asian session, to witness its retracement to the second session from its lowest since September 21, when it tested its lowest since March 12 against the Japanese yen following developments and economic data that they followed on the Japanese economy, which include The Bank of Japan monetary policy statements, decisions and directions of the Bank of Japan, and on the cusp of economic developments and data expected today, were revealed by the US economy, the largest economy in the world.

At 07:17 AM GMT, the US dollar against the Japanese yen rose by 0.05% to 104.37 levels compared to opening levels at 104.32, after the pair achieved its highest level during the session’s trading at 104.50, while the lowest level was at 104.28.

On the Japanese economy, we have followed the release of the seasonally adjusted reading of the retail sales index, which showed a decline of 0.1% compared to an increase of 4.6% last August, while the annual reading of the same index showed the widening of the decline to 8.7% compared to 1.9% in the previous annual reading for August. Worse than expectations, which indicated a widening decline to 7.5%.

This came before we witnessed the approval of monetary policy makers at the Bank of Japan at its October 28-29 meeting to maintain negative short-term reference interest rates at 0.10%, which came in line with expectations, with the Bank of Japan disclosing its policy statement. The cash and also stay on the pledge to guide the yield of 10-year government bonds at zero.

The Bank of Japan has confirmed that additional steps will be taken for monetary easing without hesitation if necessary. Otherwise, we have followed the release of the consumer confidence reading, which showed the contraction of 33.6 compared to 32.7 last September, worse than expectations when 35.2. Attention is now focused on the actions of the Bank of Japan Governor Haruhiko Kuroda to comment on the decisions and directions of the Bank of Japan.

On the other hand, investors are currently awaiting the American economy to unveil the preliminary reading of the GDP of the United States for the third quarter, which may show the largest economy in the world expanding $ 32.0 compared to a contraction of 31.4% in the second quarter, as it may reflect the initial reading of the measured GDP. In prices for the last quarter, a growth of 2.9%, compared to a contraction of 1.8% in the second quarter.

This comes in conjunction with the release of the aid requests index reading for the past week on October 24th, which may reflect a decrease of 14 thousand requests to 773 thousand applications compared to 787 thousand applications in the previous reading, and the reading of the continuous aid requests for the past week may appear on the 17th of This month, a decrease of 673 thousand applications decreased to 8,373 thousand, compared to 7.7 million applications in the previous reading.

Coming to the disclosure of housing market data with the release of the existing home sales reading, which may show a slowdown in the pace of growth to 3.1% compared to 8.8% in August, otherwise, the tension is still between the two poles of US policy, Republicans and Democrats about the approval of a second stimulus package to support The economy in the face of the negative repercussions of the Corona pandemic.

We would like to point out, however, that with the passage of time the chances of adopting the second stimulus package to support the largest economy in the world diminish amid the outbreak of the second wave of the coronavirus in America, less than a week before the US presidential elections on the third of next November, and according to the latest figures issued by the Health Organization Global, the number of cases infected with the Coronavirus increased to nearly 43.77 million, and 1,163,459 people were killed in 219 countries.

Technical analysis

The dollar against the yen shows some slight bullish tendency to test the resistance of the bullish intraday channel that appears in the image, noting that the stochastic indicator is clearly losing its positive momentum to reach overbought areas, which forms a negative motive that we are waiting to contribute to pushing the price to resume the main bearish trend, which It targets 103.65 as a next major station.

The SMA 50 continues to press negatively on the price, to maintain our bearish trend forecast, provided that the price keeps its stability below 105.20.

The expected trading range for today is between 103.60 support and 105.00 resistance.

The expected general trend for today: Bearish.