The election results confirmed the latest polls: Abe is returned to office with a huge, “super majority”. His coalition won 312 seats in the 465-strong lower house. This will allow him to enact his policies in full-swing. He vowed to use the money that will be raised by the rise in the sales tax for further fiscal spending.

And with more potential spending, the currency is lower. USD/JPY is moving higher. Can it break resistance at 114.50?

At one point, it seemed that incumbent Prime Minister Shinzo Abe faced a challenge. Yuriko Koike, who is the Governor of Tokyo and Abe’s former colleague at the LDP Party was gaining ground in the polls. However, it didn’t last that long and Abe was on the roll once again.

He now commands a majority that will allow him to change the constitution including relaxing the limits on the military. This doesn’t concern markets at the moment. The new mandate for Abenomics certainly has its impact.

USD/JPY moving up, but hesitating

USD/JPY ended the week with a weekend gap to the upside, hitting a high of 114.10. However, the pair could not hold its head above the 114 level. Strong resistance awaits at the 114.30 to 114.50 region. Can we get there? It was high in July and beforehand in May. Breaking above that level will be hard.

Support awaits at 113.50, which capped the pair during October. The gap remains open, and this is a bullish sign. However, there seems to be a lack of enthusiasm to buy the dollar. Markets are also waiting for Trump to announce his decision about the next Chair of the Federal Reserve. And there’s always the issue of North Korea.

Here is the dollar/yen daily chart.