Japanese Yen dives back closer to multi-month low against USD on US election results – FXStreet

• The Japanese yen has been unable to capitalize on the modest appreciation led by the hawkish Bank of Japan minutes.
• Uncertainty about the Bank of Japan's interest rate hike and risk-on impulses are weighing heavily on the yen.
• The US election results will cause a sharp rise in the USD, pushing the USD/JPY pair higher.

The Japanese Yen (JPY) stumbled against the US Yen following the upcoming US election results, causing a sharp intraday rally of nearly 250 pips in the USD/JPY pair during Asian trading on Wednesday. Exit polls to be released show Republican candidate Donald Trump in the lead, prompting aggressive buying of the US dollar (USD).

Additionally, speculation about President Trump's potentially inflationary tariffs and concerns about deficit spending have led to a spike in U.S. Treasury yields. This turned out to be another factor driving capital out of the low-yielding Japanese yen amid a risk-on impulse, as indicated by the upbeat mood across global stock markets.

Meanwhile, investors appear convinced that Japan's political situation may make it difficult for the Bank of Japan (BOJ) to further tighten monetary policy. This largely offsets the hawkish Bank of Japan minutes, which indicated the central bank would continue to raise interest rates if economic and price outlooks were consistent, and provided little support for the yen.

Daily Digest Market Movers: Japanese yen bears regain control despite hawkish Bank of Japan meeting minutes

• The minutes of the Bank of Japan's policy meeting in September indicated that the Bank of Japan plans to raise policy interest rates in stages, while remaining cautious in response to economic uncertainty in overseas economies, particularly in the United States.
• This, on top of Bank of Japan Governor Kazuo Ueda's hawkish comments last week, leaves the door open for further rate hikes, which would give the Japanese yen a modest boost during the Asian session.
• However, the market's initial reaction proved short-lived and fizzled out rather quickly amid doubts over whether the Bank of Japan could further tighten monetary policy in the wake of Japan's political uncertainty. .
• The US dollar rose across the board after exit polls showed Republican candidate Donald Trump with an early lead in key battleground states, causing the USD/JPY pair to jump around 250 pips. .
• The increasing odds that President Trump will win the election have fueled speculation about potentially inflationary tariffs and sent U.S. Treasury yields soaring, along with concerns about deficit spending.
• The yield on the benchmark 10-year U.S. Treasury note soared to its highest level since July, contributing to a strong bidding trend for the U.S. dollar and driving capital out of the low-yielding Japanese yen.

Technical Outlook: USD/JPY seems poised for further gains and is expected to rise above the 154.00 round figure

From a technical perspective, follow-through buying above the 153.85-153.90 area and the 3-month high touched last week leading to subsequent strength above the 154.00 mark is another opening for bullish traders. It will be seen that. Given that the oscillator on the daily chart remains in positive territory, the spot price may rise to the next relevant hurdle around the 154.60-154.70 area before aiming to recover the psychological mark of 155.00.

On the contrary, the 152.30 area appears to be protecting the 152.00 mark and the Asian session low, the previous downside around 151.30-151.25. This is followed by a round number of 151.00, below which the USD/JPY pair could slide towards the 100-day simple moving average (SMA) resistance breakpoint, which is now turning to support around 150.25. A follow-through sell-off below the psychological mark of 150.00 would shift short-term bias in favor of bearish traders, paving the way for further losses.