Another Political Risk Sinks The USD – Buy USD/JPY Now?
We have seen quite a few risky events since Donald Trump entered the White House in January. Every time Trump messed something up, we saw the USD take a dive for a few sessions/days/weeks. But the dive didn´t last long and the market reversed most or all the losses for the Buck.
Trump's failure to pass the new health bill through congress several weeks ago was the latest risky event which sent USD/JPY down to 1.08. Although, it didn´t last long, and only 2 weeks later we were more than 6 cents higher.
This week, the market is going through another of those phases. Since last weekend another political drama has underway and the USD is suffering badly. Today, it has lost nearly 300 pips against the Yen, and even the Aussie and the Kiwi which have been in a strong downtrend are gaining against the Buck.
But as we mentioned in the previous update, this latest crisis is not really any different than the previous ones. Trump will continue to be president and there will continue to be crises, although every crisis is different which makes it seem like an Armageddon is imminent every time a new crisis crops up.
Once the crisis fades, the USD selling will fade too, in my opinion. That would be a good time to open a long-term buy forex signal in USD/JPY.
But, this crisis might last a bit longer than the others because F.B.I. and other U.S. officials will be testifying in Congress, which might take a week or two, I think we should let it run for a while longer before going long.
This is the fundamental scene for this forex pair right now, which is being driven mainly by market sentiment. We will take a technical look at USD/JPY later today to see if the technical analysis falls in line with the fundamental analysis.
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