USD/JPY: Dip-buyers re-emerge sub 112.50, Trump's tax speech non-event

USD/JPY is largely unchanged in response to Trump's remarks as he lays out his government's tax cut plan, with the exchange rate sitting around the 112.80 area after a new trend high printed earlier today at 113.30. The pair's upward inertia for the last 2 days has allowed for the broader bullish trend to resume, after a bottom was confirmed circa 111.50. The more constructive outlook on the Fed's tightening path, Trump's pro-growth tax cut plan, together with a vulnerable Euro post-German elections are all elements playing a positive role on the US Dollar.

Trump's tax cut plan

Donald Trump’s speech Live Indianapolis - Tax Reform Rollout

In his tax cut proposal, US President Trump noted that "It is now time for all members of Congress — Democrat, Republican and Independent — to support pro-American tax reform. It’s time for Congress to provide a level playing field for our workers, to bring American companies back home, to attract new companies and businesses to our country, and to put more money into the pockets of everyday hardworking people."

As stated in the tax cut plan: "President Trump has laid out four principles for tax reform: First, make the tax code simple, fair and easy to understand. Second, give American workers a pay raise by allowing them to keep more of their hard-earned paychecks. Third, make America the jobs magnet of the world by leveling the playing field for American businesses and workers. Finally, bring back trillions of dollars that are currently kept offshore to reinvest in the American economy."

"The President’s four principles are consistent with the goals of both congressional tax-writing committees, and are at the core of this framework for fixing America’s broken tax code. Too many in our country are shut out of the dynamism of the U.S. economy, which has led to the justifiable feeling that the system is rigged against hardworking Americans. With significant and meaningful tax reform and relief, we will create a fairer system that levels the playing field and extends economic opportunities to American workers, small businesses, and middle-income families."

USD/JPY technicals

Valeria Bednarik, Chief Analyst at FXStreet, notes: "Up for a second consecutive day, the pair maintains a positive tone short-term, although the upward momentum remains limited, as in the 4 hours chart, the price continues developing well below its 100 and 200 SMAs, while the Momentum indicator aims modestly higher within neutral territory, as the RSI indicator aims to recover ground, but remains below its daily low, currently at 62."