USD/JPY clings to gains beyond 116.00 handle ahead of Trump

The USD/JPY pair maintained its bid tone and built on to its momentum back above 116.00 mark, albeit has retraced few pips from session high.

Currently trading around 116.25 region, the pair gained some traction on Wednesday as investors seemed convinced that President-elect Donald Trump would follow through on the campaign promises and provide specific details of the proposed fiscal stimulus measures at his first post-election press conference, scheduled later during NY trading session.

Moreover, expectations of higher US interest-rates continue to underpin the greenback, with the key US Dollar Index testing daily tops near 102.35 region. 

Meanwhile, positive sentiment surrounding European equity markets is further driving investors away from perceived safe-haven currency, the Japanese safe-haven, and is supportive of the pair's up-move on Wednesday. 

Technical outlook

Omkar Godbole, Analyst and Editor at FXStreet, notes “The pair is still in a long-term down trend. Take note of the falling trend line drawn from Dec 1975 high of 306.19 and Nov 1982 high.”

He further writes, “However, what is more important is the fact that the spot is forming an inverse head and shoulder (bullish reversal pattern) at the bottom of the multi decade down trend. On a larger scheme of things, the spot appears on track to test the inverse head and shoulder neckline level of 126.65.”