Is USD/JPY Headed for 114? Maybe, Maybe Not.

Is USD/JPY Headed for 114? Maybe, Maybe Not.

Is USD/JPY Headed for 114? Maybe, Maybe Not.

By providing very little details on the specifics of his policy plans and making grand promises (like being the greatest job producer god has ever created), Trump killed USD/JPY’s rally. The currency pair dropped from a high of 116.87 to a low of 114.21 after he began to speak in a sign of disappointment. Technically USD/JPY looks poised for a move back down to 114, but what’s interesting about today’s price action is that stocks cheered his speech and ten year yields which had fallen over 5bp intraday recovered the majority of its losses to end down marginally. This makes us skeptical of a further slide in USD/JPY but unless the currency pair recaptures 116, a return to today’s low near 114.24 becomes likely. In the short term, there’s resistance at 115.50. If USD/JPY clears that level, then the next stop should be 116 – the area where the real battle will take place. If USD/JPY manages to erase all of its post Trump speech losses, then its clear that investors still believe that the new President will deliver on his campaign promises. A drop back below 115 reflects clear skepticism.

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