🏯JPY rises 0.8% after prime minister election

Shigeru Ishiba won the internal vote for the leader of the Liberal Democratic Party in Japan and will thus be nominated as the new prime minister of Japan. He is a former Minister of Defense. Ishiba is known for supporting the current BoJ policy of interest rate hikes. His latest statement from August indicated that interest rate hikes could lead to lower prices and increased industrial competitiveness. On the other hand, the second candidate, Takaichi, was known for opposing interest rate hikes.

Technical Analysis (M15 Chart)

There is a significant strengthening of the Japanese yen against the US dollar following the news of the election of the new Liberal Democratic Party leader. Since the results, the USDJPY rate has broken through the 61.8% and 50% Fibonacci retracements and is currently testing the 38.2% Fibonacci retracement, which historically caused strong price reactions. After such a move, both RSI and MACD indicate strong oversold conditions. However, looking from the perspective of the daily chart, both RSI and MACD were in bullish divergence, which indicated strength in the US dollar. Breaking the trend line on these indicators may signal the beginning of further strengthening of the Japanese yen.