US Dollar to Japanese Yen Exchange Rate Tumbles to Multi-Month Lows as Trump Rally Unravels

The US Dollar to Japanese Yen exchange rate has plunged this week, remaining weak on Thursday as investors begin to increasingly doubt that US President Donald Trump will be able to push through key fiscal policy overhauls.

USD/JPY began the week trending at the level of 112.71 but during Wednesday’s American session hit a low of 110.81. This was the pair’s worst level in four months, since just after the 2016 US election in November.

<h3>US Dollar (USD) Sold as Investors Doubt ‘Trump Rally’ Will Pay Off</h3>

Following the election of US President Donald Trump in November last year, US markets rallied in stocks and the US Dollar due to Trump’s campaign pledge that he would introduce new fiscal policies to stimulate the US economy.

However, this week investors have begun to increasingly doubt that Trump will be successful in his plans and have unravelled their ‘Trump rally’ positions in favour of traditional ‘safe havens’ to protect their assets.

This has been largely because of Trump’s difficulty passing his proposed ‘American Healthcare Act’ (AHCA).

Trump has struggled to find key Republican support for his healthcare plan proposal this week, leading to concerns that if he can’t pass this through Congress it’s highly doubtful his plans to introduce US1$trillion in infrastructure to the US economy will pass either.

The US Dollar has also been weakened by news that the <a title="Federal Reserve" target="_blank" href="http://www.federalreserve.gov/">Federal Reserve</a> is unlikely to consider tightening US monetary policy in May and could wait until June at the earliest to act again.

<h3>Japanese Yen (JPY) Bolstered as Investors Seek out ‘Safe Havens’</h3>

The Japanese Yen has traditionally been a currency that investors look to in times of high uncertainty in global markets – a ‘safe haven’ currency.

That appeal has returned this week, as investors have appeared to give up on the ‘Trump Rally’ and instead brace for the possible incoming uncertainties of the Trump administration.

Japanese Yen trade has seen little influence from this week’s Japanese data.

The Japanese Cabinet Office published its latest economic assessment report during Thursday’s Asian session, but as the report was generally similar to February’s report the Yen remained sturdy against the US Dollar due to rising demand for safe havens.

<h3>USD/JPY Forecast: Investors Focus on US Healthcare Vote</h3>

Thursday’s American session will see the US Congress vote on whether or not to allow US President Donald Trump’s ‘American Healthcare Act’ (AHCA) to proceed.

If the bill does indeed get blocked due to a lack of Republican support, the US Dollar could plunge as investor doubts that Trump will be able to pass through his proposed fiscal policy plans will worsen.

Since Trump put across his intentions to introduce US$1trillion in infrastructure spending, critics have argued that Republicans were unlikely to back the plan. As Republicans control the majority of US Congress, this has always been perceived as a considerable obstacle.

Investors had ignored the warnings for months until now, indulging in what has been known as the ‘Trump rally’. However, as Trump faces his first Congress roadbumps, concerns have quickly increased.

If uncertainties about upcoming US fiscal policy continue to worsen, the US Dollar is likely to weaken further and ‘safe haven’ currencies like the Japanese Yen will see increased demand. The outlook for USD/JPY is currently on the downside.