USD/JPY Sets New 24-Year Highs, after Strong Election Showing from Japan’s Ruling Party
USD/JPY Analysis
The governing Liberal Democratic Party (LDP) is projected to have won 63 seats, out of the 125 that were up for grabs, in Sunday's elections for Japan's Upper House, according to NHK (Japan Broadcasting Corporation). Its coalition partner Komeito, got 13, which gives them a comfortable majority. [1]
The strong election showing of LDP, just days after the assassination of its former leader Shinzo Abe, is seen as supportive for the stimulatory fiscal and monetary policies by the government and the central bank.
The Bank of Japan is in stark contrast with its major counterparts and the Fed in particular, as it remains committed to its expansionary policy, even after inflation having exceeded its 2% target. This differential has led to USD/JPY rally during the second quarter, extending its nearly 24-year highs today, as it takes another crack at 137.00.
The technical outlook has not changed much, as bulls have the May 1998 highs (139.29) in their eyesight, but will likely need fresh impetus to challenge it and bring 142.49 is the spotlight.
Despite breaking new ground again today, progress has been slow over the last few weeks and USD/JPY eases after the initial election boost, while US 10 Year Yields also show similar movement.
Pressure back to 135.00 would not be surprising, but we struggle to see at this stage what would lead to a deeper correction and a breach of the EMA200 (at around 133.70).
This week's economic calendar starts-off in a subdued manner, but markets will get another inflation update from the US on Wednesday, which can determine the pair's trajectory and will weigh on the Fed's next policy decision.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 03 May 2024 https://www3.nhk.or.jp/nhkworld/en/news/tags/112/ |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.