The dollar-yen pair turned back to the top with a high of 105.68 recorded on 11/11, and yesterday broke the psychological milestone 104.00 and temporarily fell to 103.65. During this period, the Ichimoku Kinko Hyo reference line and turning line, the Bollinger mid-band broke below, the SANYAKU reversal suggesting a strong selling signal, and the bearish perfect order continued. It has a chart shape that impresses.

From a fundamental perspective,

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

(2) uncertainty about the future of US fundamentals,

(3) concerns about intensifying conflict between the United States and China, and

(4) geopolitics over the Korean Peninsula, the Middle East, Hong Kong, and Central Asia,

(5) Risk of spread of new coronavirus (* Expectations for new corona vaccine have been priced in),

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

(7) Deviation between the real economy and stock prices (risk of unwinding excess liquidity. The stock market fell globally yesterday),

(8) Observation of a delay in additional US economic measures (financial cliff risk),

(9) Concerns about the expansion of the US budget deficit There are still many structural uncertainties, such as (risk of a downgrade of US bonds), that remind us of the decline in the dollar-yen exchange rate.

As mentioned above, the dollar-yen exchange rate is wary of the risk of continued decline, both technically and fundamentally. Trends in Western stocks and long-term interest rates in Europe and the United States (especially wary of the risk of a fall in the major US stock indexes) and follow-up reports on the new corona vaccine (positive reports on vaccine development have already been priced in. Although it was done, the reaction is limited), while looking at the results of the US economic index (US November Philadelphia Manufacturing Business Index, US new unemployment insurance application number, US October used house sales number, etc.), we will continue to anticipate the continued decline of the dollar-yen market as the main scenario (for the time being, we will try the low price of 103.17 for the first time in about 8 months recorded on November 6).

Today’s forecast range: 103.30-104.20

Analyzed by: Mr. Naoto Arase,Independent Analyst