- Trump won the US presidential election.
- The Federal Reserve will likely cut rates by 25-bps later today.
- The likelihood of a December Fed rate cut fell from 77% to 67%.
The USD/JPY forecast shows a slight pullback amid a strong bullish surge as the focus shifts from Trump’s win to the upcoming FOMC policy meeting. The greenback soared to new heights after Donald Trump won the election. Meanwhile, the yen collapsed, leading to warnings from Japan against sharp declines.
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The US presidential election on Wednesday ended with the Republican candidate Donald Trump winning against Kamala Harris. This is the second time Trump will be president. Moreover, he has proposed tax cuts and tariffs on imported goods to boost local businesses and drive inflation higher. Consequently, the dollar and Treasury yields rallied after the election results.
However, the market focus returned to the upcoming FOMC policy meeting after the election. The Federal Reserve will likely cut rates by 25-bps later today and give clues on future moves. Market participants are almost fully pricing this rate cut. However, there is uncertainty about the December meeting.
At first, policymakers had assumed a more hawkish tone, increasing the likelihood of a pause in December. The US economy has shown unexpected resilience, shifting the outlook for rate cuts to a more gradual one. However, the last employment report raised fears of some deterioration in the labor market. The US economy added only 12,000 jobs in October, partly due to hurricane disruptions. Nevertheless, the report could lead to a more dovish tone during the meeting.
Meanwhile, December rate cut expectations eased slightly after Trump’s win. The likelihood of a cut fell from 77% to 67%.
USD/JPY key events today
- Unemployment Claims
- FOMC policy meeting
USD/JPY technical forecast: Price retests broken support
On the technical side, the USD/JPY price broke above and retested the 153.75 key level. Initially, the price paused to trade between the 151.74 support and the 153.75 resistance levels. However, bullish momentum surged and ended the period of consolidation.
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Furthermore, it pushed the price well above the 30-SMA with the RSI near the overbought region. Moreover, the price made a higher high, confirming a continuation of the previous bullish trend. If the 153.75 level holds firm as support, the price will target the 155.00 level.
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