Asian markets opened the new week with a measured response to news of the attempted assassination of former President Donald Trump. Meanwhile, US futures edged higher as investors gauged the limited impact of the incident. Online prediction markets, such as PredictIt, indicate a perceived increase in the likelihood of Trump’s re-election, potentially influencing market sentiment.
The potential implications include a stronger US dollar, reflecting anticipation of Trump’s inflationary policies such as stricter immigration controls, tougher trade measures, and increased government spending. However, safe-haven assets like gold saw subdued activity, suggesting minimal panic among investors globally. Attention is expected to shift towards the upcoming US earnings season as markets gradually move past the incident.
US Dollar Faces Resistance Despite Attempted Recovery
The US dollar is struggling to find solid footing around the 103.40 level, a key support level that has historically triggered short-term rebounds. Investor sentiment remains cautious as indicated by the daily relative strength index (RSI) dipping below the midpoint earlier in the month, and the moving average convergence/divergence (MACD) signaling bearish momentum with its recent move into negative territory.
A failure to defend the 103.40 level could pave the way for further declines towards the next support at 102.00. On the upside, a sustained recovery would require the dollar to reclaim its upward trendline, signaling renewed bullish sentiment.
USD/JPY Eyes Trendline Support Amid Dollar Weakness
The USD/JPY pair has been pressured lower towards a significant upward trendline support near 158.20, prompting scrutiny from market participants. Japanese authorities’ intervention efforts have exacerbated downward pressure, compounded by cautious market sentiment following recent dovish US inflation data.
A breakdown below the trendline support may signal a broader reversal, potentially testing the 154.60 level next. The daily RSI reflects current downside momentum, having fallen to its lowest level since March 2024. Resistance remains formidable around 160.23, underscored by previous intervention attempts by Japanese authorities to defend this level.
Related topics:
