The dollar-yen pair turned back to the top after hitting a high of 106.12 for the first time in about three weeks on October 7, and fell to 105.04, which was a low for the first time in about two weeks yesterday.  During this period, the chart shape gives an impression of the weight of the upper price from a technical point of view, such as breaking below the lower limit of the Ichimoku Kinko Hyo cloud, the Bollinger midband, the Ichimoku Kinko Hyo turning line and the reference line.

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 conflict between the US and China,

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

(5) Geopolitical risk over the Korean Peninsula, the Middle East, Hong Kong and Central Asia,

(6)Risk of re-spreading the new corona virus infection (risk of resuming lockdown mainly in Europe and the United States, and vaccines  Development delay risk),

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

(8) Divergence between the real economy and stock prices (Risk of unwinding of excess liquidity market)  ),

(9) Risk of withdrawal without UK agreement (10/15 is the de facto FTA agreement deadline),

(10)Risk of delay in additional economic measures for the United States (difficult to agree before the US presidential election), etc.

There are a lot of uncertainties. As mentioned above, the dollar-yen exchange rate is wary of the risk of continued decline, both technically and fundamentally.

Headlines over the new coronavirus and the situation in the UK (today is the de facto deadline for FTA agreements, pay attention to the EU summit), trends in Western stocks and long-term interest rates in the US, and results of major US economic indicators (October New York Fed Manufacturing)  Business conditions index, US October Philadelphia Federated Banks Manufacturing Business Conditions Index, US September import / export price index, number of new jobless claim in the US, etc.

We anticipate a decline as the main scenario (assuming a scenario that falls below the psychological milestone of 105.00).

Today’s forecast range: 104.60-105.40

Analyzed by: Mr. Naoto Arase,Independent Analyst