USDJPY Trump Rally resumes on Return of Risk Appetite


USDJPY updated its new four-month high near the 107.00 level. The US dollar keeps confidently control over the situation, trying to make an impulsive movement. Yesterday, the US index DJ30 updated historical maximum, which is also positive for the pair. This fact points to continuance of USDJPY Trump rally on the back of returned "risk appetite".

11 November, AtoZForex - USD continues to gain momentum in the entire market. It is especially obvious, when assessing the upward dynamics of the USD against the JPY. Since Wednesday, USDJPY increased more than 500 points, reaching the 106.97 level. The uncertainty in the market rose, after a number of rumors were spread related to the US economic policy after Trump's victory.

In particular, the plans of Trump's administration to stimulate economic growth, has caused the profitability growth of the US treasury bonds. On Wednesday, the yield on 10-year Treasury bonds reached a 10-month high. In addition, there are also expectations that Trump's protectionist trade policy may put upward pressure on prices and inflation in the US. In this case, the Fed will have to tighten monetary policy.

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Meanwhile, the bullish rally of USDJPY also got supported by the Bank of Japan (BOJ). The Japanese regulator emphasized that they are ready to intervene in case JPY strengthens further. The published US data on Initial Jobless Claims did not disappoint and confirmed the preserving recovery trend in the American labor market. Taking this into account, there is a big probability that the Fed will increase the interest rate in December. Today, traders should bear in mind the correctional developments of USDJPY, which is justified on the background of the latest rally. Especially, as the trading week is about to close.

USDJPY Technical analysis:

usdjpy-h4-chart, USDJPY Trump rally USDJPY H4 Chart (Click to zoom in)

Today, the pair has been trading in a narrow range between 106.00 and 106.87. Now, we can see some correctional developments in the pair.

  • The pair is trading above the moving averages 50, 100 and 200 and points on bullish sentiment.
  • The RSI is in the neutral territory, however, it’s directed upward.
  • The Stochastic Oscillator is in the overbought zone and generates the buy signal.
  • The MACD histogram is  located in the positive zone and above its signal line, thus provides a buy signal

Most likely, the price creates internal correctional fluctuations. Therefore, we shouldn't expect growth on this pair on the medium term. Nevertheless, the continuation of USDJPY Trump rally is expected.

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