USD/JPY ahead of the elections
USD/JPY is having a volatile time today. The pair firstly rose to 100.86, then slid to 99.80 and after that stabilized around the 100.00 handle. Nikkei 225 closed down by 1.48%.
Japanese elections are on this weekend’s agenda. Yen rose as investors squared their positions. According to the opinion polls, the ruling Liberal Democratic Party has a good chance of taking a majority in the upper house. In this case the path for Prime Minister Shinzo Abe’s aggressive economic reform will be clear. The likely consequences of such outcome include higher stock markets and weaker yen. At the same time, note that anything less than the LDP’s sweeping victory can disappoint traders and increase demand for JPY.
Support lies at 99.95, 99.70, 99.50, 98.70 and 98.15. Resistance is at 100.50, 100.80/85 and 101.40. In the longer term we remain USD-bulls and recommend buying from 99.50 or on a strong rebound from 100.00. Still you won’t miss the fun if you join on Monday when political things become clearer.
Chart. H1 USD/JPY