USDJPY analysis 20.11.2020

The US dollar fluctuated in a narrow range slanting to rise during the Asian session against the Japanese yen, following the developments and economic data that were followed on Friday by the Japanese economy and amid scarce economic data in the last sessions of the week by the US economy, the largest economy in the world.

At 07:17 AM GMT, the US dollar against the Japanese yen rose by 0.08% to 103.82 levels, compared to the opening levels at 103.74, which is the lowest level for the pair during the session's trading, while the pair achieved its highest level during the session's trading at 103.91.

We have followed up on the Japanese economy revealing the inflation data with the release of the annual reading of the national consumer price index, which showed a contraction of 0.3% versus the stability at zero levels last September, worse than expectations that indicated a contraction of 0.3%, while the annual reading of the same excluded index Of which fresh food widened the contraction to 0.7%, in line with expectations from 0.3% in September.

In the same context, the annual reading of the consumer price index excluding energy and fresh food showed a 0.2% contraction, in line with expectations against stability at zero levels in September, and this came, before we witnessed the release of the preliminary reading of the manufacturing PMI by Markit on Japan, which showed that the contraction widened to 48.3, compared to 48.7 last October, missing expectations of 49.4.

On the other hand, we have just followed the Federal Reserve’s statement in which it stated that it “prefers that the full set of emergency facilities that were established during the Corona pandemic continue to play their important role as an anchor for our economy, which is still suffering from stress and weakness.” Fast-forward to US Treasury Secretary Stephen Mnuchin’s refusal to extend several emergency loan programs created in conjunction with the Federal Reserve.

We also followed yesterday the Federal Reserve’s issuance of the final rule for amending the annual valuation fee for its supervision and regulation of major financial firms. Otherwise, markets are looking forward later today to FOMC and Dallas Federal Reserve Chairman Robert Kaplan's speech on energy and economics at a conference hosted by the Bank. Dallas Federal Reserve.

Technical analysis

The dollar against the yen achieved a temporary rise yesterday, to test the 104.20 level, and bounce back down from there, to settle near the 103.65 support level again, which keeps the bearish trend scenario valid and likely for the upcoming period, supported by the negative pressure that the MA 50 represents, waiting for a negative stimulus to contribute Pushing the price to break the aforementioned support to confirm the extension of the descending wave towards 103.00.

So far, the bearish trend will remain valid and effective for the upcoming period, unless the 104.20 level is breached and stability above it.

The expected trading range for today is between 103.00 support and 104.30 resistance.

The expected general trend for today: Bearish.