One day to go before the Donald officially becomes POTUS! Are you ready with your dollar-related charts? I found a setup on USD/JPY for dollar bears out there!
As you can see on the chart below, USD/JPY is currently having trouble breaking above the 200 SMA on the 1-hour time frame. This is probably because it happens to line up with a falling channel resistance that has been around since the start of the year. What’s more, it’s just below the 115.00 – 115.50 area near the top weekly ATR. Oh, and take a look at the slight bearish divergence on the chart!
I have mentioned before that I’m a long-term dollar bull. My bias only strengthened after I heard Janet Yellen and a couple of other FOMC voters hinting of more aggressive interest rate hikes this year. And why not? Employment has indeed gone up and inflation is on its way to meeting the Fed’s targets.
However, I can’t discount the possibly bearish impact of Donald Trump on the Greenback. Aside from jawboning the currency, he has shown his capability to weigh on the dollar simply by not talking about issues that propped it up after he won the Presidential elections.
Trump’s spokesman Sean Spicer said that Trump is set to take four to five executive decisions as soon as he steps into the White House on Friday. If he addresses anything related to tax cuts and increased fiscal stimulus, then we might see an extension of last year’s dollar rally. But if he pushes policies for issues like building a wall, pulling out of NAFTA, or increased protectionism, then the dollar could continue its downtrend since the start of the year.
For now, I’m keeping close tabs on the falling channel on the 1-hour time frame. Shorting at current prices is a good idea, but taking profits or staying in the sidelines altogether ahead of the inauguration is also not a bad strategy. Hey, no position is a position, right?
Will the dollar continue to see losses this week? Or will Trump’s much-awaited, but not-so-star-studded inauguration be actually good for the Greenback? What do you think?
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