USD/JPY Forecast: Hong Kong Elections Fuel Risk On Appetite

November 25, 2019

An Unlikely Catalyst

The kinship between Hong Kong and the U.S. dollar is tenuous at best and yet the indefinite is leading to a rally in the other. The results of Hong Kong's elections resulted in an overwhelming win for favoring-democracy candidates. The results are a admonitory shot to the establishment (China) that its policies will not be tolerated as they are on the mainland. While the news does little to assure Hong Kong's ultimate liberty it is having a positive effect on markets about the world. What it substance for investors is stability (at least the removal of one uncertainty) within the region and that is fuel risk-along appetite.

What this means for the dollar is a reposition from risk-inactive assets same the Japanese Yen in party favour of riskier bets on global growth. The USD/JPY is moving up in early Monday action because of it and the charts point to solid gains in the weeks ahead. Now's candle is a solid move up from support at the pint-size-term moving average and the precursor to a possibly strong grease one's palms-signal. The go up is already confirmed by a bullish crossover in random that is eligible with the rife trend. A move higher may find electric resistance at the 109.50 level but, once that is broken, a move up to 110.00 or 110.50 is expected.

What could possibly move this brace above resistance? How about a raft of economic data that is for the most part expected to confirm fundamental enduringness inside the U.S. economy. Wednesday, due to the Thanksgiving holiday, there are a dozen John Roy Major social science releases for the U.S. These let in but are not limited to Personal Income and Spending, Consumer Level Inflation, Michigan PMI, and the Fed's Ecru Quran. One by one, nary single data point is expected to be broad-shouldered, arsenic a whole the package is expected to reveal stable if not modestly accelerating economic enlargement despite the impact of the trade war.

Despite the mindset, there is some run a risk to this trade. Weak data, wishy-washy inflation, or negative trade news could put this pair into a reversal. The weekly chart helps highlight this risk as it shows an asset aroused within a trading range and very near the midpoint of that range. The echt news, for traders, is that a unchangeable of endorse/resistance at this stratum is likely active to lead the pair up/down by 350 pips or more.