Aside from the U.S. President Donald Trump tax announcement, Wednesday will be thin in terms of economic data. Euro and U.S. dollar traded sharply higher yesterday while the commodity currencies remain under pressure.
All eyes on U.S. Tax Reform
U.S. President Donald Trump is expected to make a big announcement on tax reform today and during his campaign said that he wanted to cut the corporate tax rate to 15% from 35% and reduce the number of tax brackets, bringing the highest tax rate down to 25% from 39.6%. U.S. dollar soared while the Nasdaq composite index climbed to a record high at 5557.62 after an aggressive buy interest. Meanwhile, the greenback traded mixed ahead of the G10 counterparts whilst it is worth to mention that it moved higher against the commodity currencies and the Japanese yen.
June rate raise expectations continued to occur despite the weaker U.S. economic data. On Tuesday’s session houses prices rose at a slower pace and the new home sales edged higher in March in month-over-month basis to 0.621M from 0.587 before. No major U.S. data is scheduled for release today, however, the investors’ attention will be on Trump’s tax reform speech.
USD/JPY – Technical Outlook
The USD/JPY pair traded strongly higher over yesterday’s trading session and jumped above the significant barrier at 110.60 which was acting as a resistance obstacle. The buck surged more than 1% versus the Japanese yen in one day and now is ready to challenge our recommended target at 111.60 (see technical analysis here: https://bit.ly/2puVUoI) near the 50-daily SMA.
The technical structure suggests further bullish move as the technical indicators are moving to the upside with strong momentum. The RSI indicator climbed above the 50 level and the MACD oscillator is rising into the negative territory. The next levels to watch are the 112.20 resistance level and 112.90 which coincides with the 200-daily SMA. Also, in the case of a sharp run, we could see a retest of the descending trend line which is holding since December 2016.
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