Impact Of U.S. Elections On Forex Markets: Analyzing Dollar Surge And JPY Pairs

USDJPY Analysis

Beginning with the USDJPY, the pair is now approaching the July peak at 155.21 after breaking above a resistance level at 153.87. If the bullish momentum persists, we may see patterns emerge that could limit upward movement. Around the 161.8% Fibonacci extension, shortly above July's highs, at 155.55, a bearish crab pattern could emerge, which might lead to a correction toward the .382% retracement at 149.47. Still, a crucial question is whether this DXY strength will last or if it is only a temporary response to the elections.

Should this momentum endure, and we may observe the USDJPY challenge previous highs around to the monthly fractal resistance forged at 161.95. In this scenario, the bearish crab pattern would change to a bearish shark pattern as it moves into the 224% Fibonacci extension, which is oddly in line with the price of 161.68 and just below the major fractal resistance level. Looking at other Japanese peers, the question remains: "Will an eventual dollar appreciation in the current environment favor the decline of the Japanese yen in general?"

AUDJPY and EURJPY Movements

Let's look at the pair AUDJPY. For nearly a month, the pair has been negotiating a 260-pip range between support at 99.07 and resistance at 101.69. In response to the American elections, the pair was forced to depart the weekly fractal resistance that was acting as support at 99.86 and test the upper limit of this range and daily fractal resistance at 101.69. The break over this resistance  can open the door to an interesting upward movement, or it can even force the par to challenge the previous highs established at 109.37. As this scenario emerges, we should also be aware of the formation of patterns, such as a bearish bat pattern at 107.17.

The EURJPY pair is under pressure due to the direct relationship between the DXY and the EUR/USD, and has had a neutral reaction to the American elections, only slightly dropping following the establishment of the fractal resistance at 166.69. The intraday support around 164.94 limits downward movement, raising the question of whether the Yen's weakening against the dollar can induce upward movement in this and other yen pairs, causing it to move higher and eventually force the restest to the previous highs of July 11 and monthly fractal resistance at 175.42. Similar to the previous pairs, we should be aware of the formation of "reversal" patterns, which in this case are projected at 171,03, indicating a 3.8% upward movement towards the.886% Fibonacci retracement level.

GBPJPY and NZDJPY Trends

The GBPJPY chart shows a fairly linear and objective price structure. The weekly fractal resistance was broken at 195.97, resulting in the formation of a new resistance at 199.80, but it was also retested, and rejected, with the formation of a new fractal support at 195.38. If the fractal resistance is confirmed to be broken, the opportunity to retest the previous highs of July 11th becomes viable. Similar to the EUR/JPY pair, the Pound may form a bearish bat pattern projected at 204.84 at the .886 Fibonacci retracement level, and this implies a 2.5% increase over the most recent resistance now under pressure.

The NZDJPY pair may also be affected in the same way. If the break in the range that has remained for 36 days between resistance formed at 92.29 and support formed at 90.05 is confirmed, we can anticipate an attempt to test the July highs at 99.00. The same bearish bat pattern is projected to surge at the.886% Fibonacci retracement level of 97.18, indicating a 5.3% increase above the fractal resistance.

CADJPY Outlook

Finally, and not to be overlooked, CADJPY is now testing resistance as I write. The range between resistance at 110.72 and support at 108.96 is under threat of a breakout to the upside. If this occurs, we may anticipate a more substantial recovery attempt for the pair. However, much like my projection for USDJPY, we could also foresee the formation of a bearish deep crab pattern around 112.96—just above the late-July highs of 112.09.
However, the possibility of retesting previous highs remains open for this pair as well. In this scenario, we'll also be monitoring for the potential formation of a bearish bat pattern, which is projected to emerge around 116.90.

Conclusion

As market dynamics evolve post-election, vigilance towards emerging patterns and resistance levels is critical. Explore comprehensive analyses of U.S. elections' impacts on forex markets, gaining strategic insights to optimize trading decisions in volatile times.

Andre Cardoso

Forex Analytix