- USD/JPY headed to 109 handle?
- USD/JPY downside opened up on the tax plan delays news.
- Watch out for a dovish Fed hike.
USD/JPY has made fresh lows for the session on the back of the news that indeed the corporate tax cuts that the GOP intends to apply will be delayed until 2019. The move in the yen takes it down to an 8-day low, en route for a break of the 113 handle and to match or exceed the 31st October lows.
Senate tax bill to delay corporate tax cut until 2019, dollar to deflate?
Where does USD/JPY head next on this news?
The DXY is now down 0.41% and US 10 year yields are down -0.52%. One can't help but imagine that the same technical picture will emerge as we have seen that each time the yen dropped above 114, supply emerged and took the pair back as far as into territory on the 109 handle. There was a great deal of the Trump trade priced into the dollar on the back of a more immediate tax relief programme. Trump's insistence and bullish rallying implied that immediate changes were necessary to spur the economy, something that the market had bought into. If markets were not already cautious over Trump's rhetoric, then we might see a more Fabian approach to the bid from here on and a fade on rallies could be the gameplay, at least while there is a void of Fed optimism ahead of the Dec meeting where rates are expecting to be lifted. Although, what would a dovish hike mean to the dollar?
USD/JPY levels
USD/JPY failed at the top of the recent range 114.38/58, (May and July highs and the 2015-2017 downtrend), and is currently pressured towards 31st Oct lows at
112.95. The near-term risk is for a deeper retracement to 112.03/111.75 (the 200-day ma and the 55-week ma), according to analysts at Commerzbank. "Ideally this will hold, while above here an upside bias will persist. A close above 114.58 will introduce scope to the 118.60/66 January high. Where are we wrong? The 55-day ma guards the 109.55 mid-September low and in turn this support guards the 108.81/13 April and June lows as well as the September low at 107.32," the analysts argue.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.