Japanese Yen slumps to 153.00 against USD after initial US election results

• The Japanese Yen fails to capitalize on the hawkish BoJ minutes-led modest gains.  
• The BoJ rate-hike uncertainty and the risk-on impulse weigh heavily on the JPY.
• The US election results trigger a sharp USD rally and push the USD/JPY pair higher.

The Japanese Yen (JPY) touches a two-week high against its American counterpart during the Asian session on Wednesday after Bank of Japan (BoJ) minutes showed that the central bank will continue to hike interest rates if economic and price forecasts meet. Investors, however, seem convinced that Japan's political landscape could make it difficult for the BoJ to tighten its monetary policy further. Apart from this, a generally positive risk tone undermines the safe-haven JPY. 

This, along with the emergence of strong US Dollar (USD) buying, bolstered by initial exit polls showing that the scale leans toward former President Donald Trump, triggers a goodish intraday recovery of nearly 150 pips for the USD/JPY pair. As polls continue to hit the wires, markets are expected to react sharply one way or the other. This, in turn, warrants some caution for aggressive traders and before positioning for a firm near-term direction for the currency pair. 

Daily Digest Market Movers: Japanese Yen is pressured by resurgent USD demand

• The minutes of the September Bank of Japan policy meeting showed that the central bank plans gradual policy rate increases, though it remains cautious about overseas economic uncertainties, especially from the US.
• This comes on top of BoJ Governor Kazuo Ueda's hawkish remarks last week and keeps the door open for additional rate hikes, which, in turn, provides a modest lift to the Japanese Yen during the Asian session. 
• The initial market reaction, however, turns out to be short-lived and fades rather quickly amid doubts over the BoJ's ability to tighten its monetary policy further in the wake of the political uncertainty in Japan.
• The US Dollar rallies across the board after exit polls indicate an early lead in Georgia (swing state) for the Republican nominee Donald Trump, triggering a sharp surge of nearly 150 pips for the USD/JPY pair. 
• Rising odds of Trump winning the election fuel speculations about the launch of potentially inflation-generating tariffs, which, along with deficit-spending concerns, push the US Treasury bond yields sharply higher. 
• The yield on the benchmark 10-year US government bond spikes to its highest level since July, contributing to the strong bid tone surrounding the USD and driving flows away from the lower-yielding JPY.

Technical Outlook: USD/JPY could aim to challenge the multi-month top, around 153.85-153.90 area

From a technical perspective, sustained strength beyond the 153.00 round figure could lift the USD/JPY pair to the 153.35-153.40 supply zone en route to the 153.85-153.90 region, or a three-month peak touched last week. Some follow-through buying will be seen as a fresh trigger for bullish traders. Given that oscillators on the daily chart are holding in the positive territory, spot prices might then climb to the next relevant hurdle near the 154.60-154.70 area before aiming to reclaim the 155.00 psychological mark. 

On the flip side, the 152.30 area now seems to protect the immediate downside ahead of the 152.00 mark and the Asian session low, around the 151.30-151.25 region. This is followed by the 151.00 round figure, below which the USD/JPY pair could slide towards the 100-day Simple Moving Average (SMA) resistance breakpoint, now turned support, around the 150.25 region. Some follow-through selling, leading to a break below the 150.00 psychological mark, will shift the near-term bias in favor of bearish traders and pave the way for deeper losses.