- The yen collapsed to a three-month low after Japan’s election.
- Japan’s ruling Liberal Democratic Party won only 215 seats.
- The likelihood of a Trump win in the November election has boosted the greenback.
The USD/JPY forecast shows lower expectations for BoJ rate hikes after Japan’s election, which has left the yen fragile. At the same time, the dollar remained strong and was heading for a monthly gain due to better-than-expected economic data and the Trump trade.
–Are you interested in learning more about British Trade Platform Review? Check our detailed guide-
After Japan’s election, the yen collapsed to a three-month low as market participants slashed BoJ rate hike expectations. The Liberal Democratic Party won only 215 seats, below the majority of 233. Consequently, it creates a challenging outlook for fiscal and monetary policies. At the same time, the Bank of Japan might assume a cautious tone due to political uncertainty.
Economists expect the next rate hike in March next year. Meanwhile, inflation figures have shown weak consumption that could lead to further hike delays. As the yen declines, top officials in Japan have warned against sharp moves. Notably, the yen has had the biggest loss against the dollar this month, at 6.4%.
Meanwhile, the US dollar has gained amid signs that the US economy remains resilient despite high interest rates. Data throughout the month has revealed a better-than-expected performance, which has reduced Fed rate cut bets. Traders went from pricing in a 50-bps rate cut in November to a 25-bps rate cut.
At the same time, the likelihood of a Trump win in the November election has boosted the greenback. Trump’s policies might increase inflation, pausing the Fed’s rate-cutting cycle.
USD/JPY key events today
Market participants will keep digesting Japan’s election outcome as there will be no key events today.
USD/JPY technical forecast: Bullish momentum fades above 153.00
On the technical side, the USD/JPY price has reached a new high above the 153.00 resistance level. Moreover, the price trades well above the 30-SMA with the RSI above 50, suggesting a bullish trend.
–Are you interested to learn more about forex signals? Check our detailed guide-
However, the RSI has also made a bearish divergence, indicating weaker bullish momentum. Therefore, bulls might be exhausted, allowing bears to take charge by pushing below the 30-SMA. A break below the SMA would allow the price to reach the 150.00 support level. However, if bulls regain momentum, the price might only revisit the SMA before making new highs above 153.00.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
Share
Saqib Iqbal
