On Monday, the Japanese currency paired with the US dollar fell by almost 250 points. The rapid rise of the USD/JPY pair was primarily due to the decline in risk-off sentiment against the background of the pharmacologists' success in developing a coronavirus vaccine. However, the euphoria of traders on this occasion passed the next day – it became obvious that mass vaccination is still out of reach, and the transportation of the drug is associated with certain difficulties (the substance should be stored only at ultra-low temperatures).
Against the backdrop of this matter, the market returned to its previous mood, and the greenback began to show its vulnerability once again. However, this circumstance failed to be of help to the yen: the USD/JPY pair is still held within the 105th figure, while any attempts by bears to leave this price area are suppressed by the activity of buyers. Apparently, since market participants no longer need the "services" of this protective tool, it is unlikely that traders will be able to return to their previous positions (in the area of the 103rd figure). At least the fundamental background to this is not yet available.
Over the past week, the yen has been rising thanks to the US presidential election. The period of political uncertainty in the US played into the hands of the bears of the USD/JPY pair, especially since for a relatively long time there was no clear winner in the elections: the key states were "distributed" between Biden and Trump. As a matter of fact, the main struggle unfolded in Pennsylvania, where the victory was gained by the leader of the Democrats.
Despite this, there is still no official verdict—we can only judge that he won the US presidential election by the reports of the leading American media. In several states of the country, the counting of votes is still ongoing, ergo it is still impossible to talk about any final results. The "deadline" for the electoral process is set on December 8, and before this date, each state of the country must complete the counting of votes and announce the results. After that, on December 14, the members of the Electoral College will announce the winner by formally voting for them (according to a recent decision of the Supreme Court, electors do not have the right to change their opinion, although there have been similar precedents before).
In conclusion, although Biden has already been congratulated on his victory by the leaders of the world's leading countries (except Russia and China), the US election is not yet over from a formal point of view. Furthermore, current US President Donald Trump refuses to recognize the results of the vote and is currently trying to challenge them in the courts. His lawyers have already appealed to the district courts of several states to suspend the vote count. In particular, we are talking about Arizona, Nevada, and Michigan. The courts of these states have already ruled that the claims of the Trump staff have insufficient grounds. Meanwhile in Pennsylvania, Republicans have had some success: The US Supreme Court ordered that ballots received by mail after election day be separated in this state "until further notice." The essence of the claims from Trump's lawyers is the same: in many "wavering" states, the Republican was leading (by a small margin) up to a certain point. However, based on the results of counting "postal votes," Biden was ahead. According to Trump's lawyers, all of this indicates probable violations of the election by Democrats.
The yen reacted quite sharply to the actions of the Republican team last week. However, Japanese currency is almost indifferent to American events at the moment. In my opinion, this is due to the fact that Biden's victory is already obvious—numerous American experts, lawyers, and political scientists have already voiced their confidence that the Democrat will become the next President of the country. On the other hand, Trump's line of conduct is predictable. It is possible that his lawyers will achieve a recount of "postal" votes in certain areas. But, this will not change anything, according to a number of American journalists.
Based on previous research, since the majority of supporters of the Democratic party prefer to vote by mail, a second vote count can only confirm the victory of Joseph Biden. And not all of the Republicans' accusations are confirmed. Today, it became known that a mail employee from Pennsylvania, whose statement was cited by leading Republicans as proof of large-scale voting violations in the United States, admitted that he fabricated the charges. And according to the Washington Post, the man recanted his testimony.
To summarize it all, it is worth noting that the Center for Presidential Transition has already expressed support for Biden's victory. According to the representatives of this body, the result of the elections is "quite clear" and, despite the ongoing litigation, the parties need to start the process of transferring / accepting power.
Therefore, the yen fails to regain its advantage due to the prevailing fundamental background. Both on yesterday and today's Asian session, the USD/JPY pair tried to return to the area of the 104th figure, but it attracted the interest of buyers the moment that it approached the middle line of the Bollinger Bands indicator on the daily chart (104.80). As a result, the price remains within the 105th figure. All this indicates the priority of long positions on the pair (especially on downturns). The first target of the northern movement is 105.50 (the middle line of the Bollinger Bands indicator on D1). The main target is 106.00 (the upper line of this indicator on the same timeframe).