JPY is gaining against USD
Yesterday morning the Japan’s GDP for the second quarter was released. It was slightly worse than analysts expected: -0.6% versus -0.5%. On the whole, that data proved that Japan fell into recession as it experienced two straight quarters of contraction. While US and most European countries switched from crisis-response to the next phase of supporting the economic growth, Japan is still stuck in the first one as it continues to focus on preventing a second wave of coronavirus. According to the senior economist at Oxford Economics, Stefan Angrick, the outlook is “extremely challenging”. Japan has its worst postwar drop in the current quarter.
Nevertheless, the Bank of Japan has already took all needed measures to stimulate the economy. Now it’s the matter of time to see the economy recovering. A Cabinet Office survey on Monday showed Japan’s service sector sentiment improved last month, and that is quite promising. Also Japan’s government is going to unveil 1.1 trillion dollars stimulus package. It will definitely underpin the whole economy.
Technical outlook
The USD/JPY tested the largest intraday fall yesterday since March 27. It’s headed towards the 50-day moving average at 107.5. If it sticks to the long-term bearish trend and crosses it, it may go even deeper to 107.0. Resistance levels are at 110 and 111.
