US President Donald Trump. Image source: Gage Skidmore, flickr.com
Market tensions eased today after it was revealed that President Trump has agreed to allow President-Elect Joe Biden and his team to begin the transitionary process by allowing them access to briefing books and other agency meetings.
Even still, Trump is not yet ready to concede, despite the fact that his legal team has suffered multiple setbacks while disputing the validity of the elections. The latest such blunder for Trump was the designation of Biden as a clear winner in the key swing state of Michigan.
In a typical fashion, the President announced his decision in a series of tweets:
He used evasive language to avoid directly admitting defeat and emphasised on the struggles faced by him and his administration. The closest that he came to relenting his initial demands was when he said: " I am recommending that Emily and her team do what needs to be done with regard to initial protocols".
Markets have welcomed these early steps by the President as a sign of progress, as the transitionary process is likely to reduce overall uncertainty. Consequently, bolstered investors' enthusiasm has strengthened the belief that the world economy is one step closer to overcoming the current crisis.
The immediate outcome of this was the decreased global demand for safe havens and other low-risk securities. Gold continued to depreciate following yesterday's major plunge, while the dollar erased some of its recent gains.
Despite this momentary disruption, the greenback is showing definite signs of stabilisation, and many market participants anticipate it to climb against most other majors in the near future.
As can be seen on the 4H chart below, the USDJPY managed to break out above the major support at 104.200 yesterday, which underpins the previously mentioned fall in global demand for safe-haven assets.
The price action of the pair has had an engaging relationship with the 100-day MA (in blue), which has been marked by important rebounds and consolidations. Today's news caused one such temporary rebound, as the price is currently consolidating just above the support.
If the pair fails to break down below it, the newly emerging upswing can continue to develop towards the psychologically significant resistance level at 105.00. This expectation is supported by the ostensibly bullish momentum, which is continuing to rise, as demonstrated by the MACD indicator.
USDJPY 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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