- Trump won the US presidential election.
- The Federal Reserve is likely to cut rates by 25 bps later today.
- The probability of a December Fed rate cut fell from 77% to 67%.
The USD/JPI forecast shows a slight dip amid a strong bullish rally as focus shifts from Trump’s victory to the upcoming FOMC policy meeting. The dollar soared to new heights after Donald Trump won the election. Meanwhile, the yen fell, prompting Japan to warn of a sharp fall.
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The US presidential election on Wednesday ended with the victory of Republican candidate Donald Trump against Kamala Harris. This is the second time Trump will be president. Moreover, he proposed to reduce taxes and duties on imported goods to encourage local businesses and increase inflation. Accordingly, the dollar and Treasury yields strengthened after the election results.
However, the market’s focus has returned to the upcoming FOMC policy meeting after the election. The Federal Reserve is likely to cut rates by 25 bps later today and give an indication of future moves. Market participants almost entirely determine this rate cut. However, there is uncertainty surrounding the December meeting.
Initially, policymakers took a more hawkish tone, increasing the likelihood of a December break. The US economy has shown unexpected resilience, shifting the outlook for rate cuts to a more gradual one. However, the latest employment report raised fears of some deterioration in the labor market. The US economy added just 12,000 jobs in October, partly due to hurricane disruptions. Still, the report could lead to a more dovish tone during the meeting.
Meanwhile, expectations for a December rate cut eased slightly after Trump’s victory. Probability of reduction dropped from 77% to 67%.
USD/JPI Key Events Today
- Claims for the unemployed
- FOMC Policy Meeting
USD/JPI Technical Forecast: Price retests damaged support
From the technical side, USD/JPY the price broke above and retested the key level of 153.75. Initially, the price paused to trade between the support level at 151.74 and the resistance level at 153.75. However, the bullish momentum picked up and ended the period of consolidation.
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Moreover, it has pushed the price well above the 30-SMA with the RSI near the overbought region. Moreover, the price made a higher high, confirming the continuation of the previous bullish trend. If the 153.75 level remains firm as support, the price will target the 155.00 level.
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