The dollar-yen pair turned to rebound after hitting a bottom of 104.00, the lowest in about half a year, recorded on 9/21, and rose to 106.11, the highest since 9/14 yesterday.

During this time, the chart impresses the “stiffness of the lower price” from a technical point of view, such as breaking above the Ichimoku Kinko Hyo reference line and turning line, the Bollinger mid-band and the Ichimoku Kinko Hyo cloud lower limit, and breaking through the psychological milestone 106.00. It has a shape (attention is paid to whether or not the upper limit of the Ichimoku Kinko Hyo cloud located near 106.18 can be exceeded).

However, from a fundamental perspective,

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

(2) uncertainty about the future of US fundamentals,

(3) the risk of sharpening the US-China conflict,

(4) uncertainty about the future of US politics (on November 3). Uncertainty about the upcoming US presidential election),

(5) Risk of re-spreading the new coronavirus (risk of resuming lockdown),

(6) 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),

(7) Divergence between the real economy and the stock market (risk of unwinding excess liquidity market. Realization of financial cliff risk),

(8) UK rekindling the risk of withdrawal without an agreement,

(9) Delay risk of additional economic measures in the US (US President Trump said on October 6 that “discussion on additional economic measures will be stopped until after the presidential election”).

There are a lot of uneasy factors that remind us. As mentioned above, the dollar-yen rate is technically picking up, but it is expected that the fundamental weakness will prevent it from continuing to grow. While looking at stock market trends, headlines on the US-China conflict and the situation in the UK, the results of major US economic indicators (such as the number of new jobless claim in the US), and follow-up reports on additional US economic measures, we continue to see the dollar-yen rate. We anticipate a rebound after one round as the main scenario.

Today’s forecast range: 105.50-106.30

Analyzed by: Mr. Naoto Arase,Independent Analyst