Wednesday, November 7, 2018

USD/JPY - 07 November 2018


Fundamental Highlights

The Dollar/Yen loses ground following the weakening of the US Dollar as the Republican party retains control of the Senate but loses control of the House of Representatives. A divided US Congress will mean that President Trump’s future fiscal initiatives will be more difficult to implement leading to expectations of easing inflationary pressure within the US economy. Easing inflationary pressure will mean that the Federal Reserve will not need to hike rates at the current aggressive pace to dampen undesired high inflation. Expectations of lower interest rates was also reflected by a drop in US yields, explaining the drop in the greenback. Going forward, investors will need to monitor US Treasury yields as it will guide them towards determining the future trend of the US Dollar.

Technical Analysis

The Dollar/Yen drops below the 13-period moving average indicating a short term shift in momentum. A break below the 50-period moving average and the 112.81 support will mean that the medium-term momentum will turn bearish. Moreover, the break below the 112.81 will signal a drop towards the next significant support level at 112.16.

Support: 112.81 / 112.16
Resistance: 113.08 / 113.78

Chart (H4)