Dollar-yen pair turned to a rebound from the high of 106.96 recorded on August 28 and then plummeted to 104.00 (the lowest price in about half a year) on September 21. During this period, the Ichimoku Kinko Hyo reference line and turning line, the Bollinger mid-band and the Ichimoku Kinko Hyo cloud lower limit were breached, and a SANYAKU reversal suggesting a strong selling signal was also established.

It has a chart shape that impresses (although it has turned to repulsion at the feet, it continues to be sluggish at the mid-105 yen level where the Ichimoku Kinko Hyo reference line and the Bollinger mid-band are concentrated).

From a fundamental perspective,

(1) differences in the direction of US-Japan monetary policy,

(2) uncertainty about the future of US fundamentals,

(3) risk of sharpening US-China conflict,

(4) uncertainty about the future of US politics (scheduled for November 3). A sense of caution about the U.S. presidential election. Mr. Biden predominates in the TV debate held yesterday,

(5) Uncertainty about the future of the Japanese economy (Uncertainty about the future of the Japanese economy → Concerns about deflation → Rising real interest rates in the yen → Strong yen),

(6) Divergence between the real economy and the stock market (risk of unwinding the excess liquidity market.

There are a lot of uncertainties reminiscent of the decline in the dollar-yen market, such as the emergence of the risk of cliffs) and the rekindling of the risk of withdrawal without an agreement.

As mentioned above, the dollar-yen exchange rate is wary of “fall risk” both technically and fundamentally. Stock market trends, headlines on US-China conflict and UK affairs, results of major US economic indicators (US new jobless claim applications, US September manufacturing PMI, US September ISM manufacturing business conditions index, etc.), new market situation while looking at the follow-up report on the second wave of coronavirus and the situation of US presidential candidates (opinion poll results, trends of bookmakers, etc.), we will continue to anticipate a decline in the dollar-yen market as the main scenario (today).

As more Chinese enter the Aniversary of foundation quiet price movements are assumed in the Asian time zone.

Today’s forecast range: 105.00-105.80.

Analyzed by: Mr. Naoto Arase,Independent Analyst