USD/JPY looking to close the bullish opening gap?

The bid tone around the Yen is seen growing bigger, as we head into early Europe, now pushing the USD/JPY further southwards in a bid to close in the bullish opening gap witnessed in Asia.

USD/JPY: Sell the fact on Abe’s landslide victory

The outcome of the Japanese election, with Abe emerging victorious with a Supermajority in the Lower House, had an initial knee-jerk reaction on the USD/JPY pair, as it opened with a 50-pips bullish opening gap and went onto print fresh 3-month peaks at 114.10 levels.

Japan: Abe kept its two-thirds “super-majority” in Sunday’s snap election - TDS

The spot rallied on the back of Abe-win induced renewed risk-on wave triggered across the financial markets, which took the greenback broadly higher alongside the Treasury yields.

However, the spike above 114 handle soon faded and the Yen managed to regain lost footing amid profit-taking, as markets resorted to ‘Sell the fact’ trading strategy, with the election outcome already priced-in.

Later today, it remains to be seen whether the pair closes in the opening gap, as the sentiment remains buoyed amid firmer US dollar and higher global equities.

USD/JPY Technical View

Jim Langlands at FX Charts offers key technical levels: “There is not a lot of resistance ahead of 114.00, above which there is again very little to be seen until 114.50.On the downside, minor support today should arrive at 113.20/00 below which 112.80 and Friday’s low of 112.50 should provide decent backup. Below there, the 19 Oct low at 112.30, and the 18 Oct low at 112.12 would attract.”