Following the Bank of Japan's monetary policy meeting and Governor Ueda's press conference, dollar-yen continues to trade around ¥157. The growing view that a Blue Wave is possible in the upcoming midterm elections is being watched as a factor that could cap gains.
Dollar-yen is trading in a relatively narrow range around ¥157 following today's main event, the Bank of Japan's monetary policy meeting and the press conference by the governor of the Bank of Japan. A significant breakout from the range appears unlikely, and the upside is considered heavy.
This week brought a succession of announcements from major central banks, including the US FOMC, the ECB Governing Council and the Bank of Japan's policy meeting, but all left their policy rates unchanged. Although the Bank of Japan's Outlook for Economic Activity and Prices suggested an upward revision to its inflation outlook, it contained few surprises. Market attention is focused on the direction of US equities following Big Tech earnings and on next week's midterm elections.
Ahead of the midterm elections, some believe the possibility is increasing that the Democratic Party will secure majorities in both houses of Congress, creating a "Blue Wave." There is speculation that Democratic-led policies could promote tighter regulation of the AI sector, stricter environmental assessments of data infrastructure and stronger enforcement of antitrust laws, while moves to test the downside for US equities could weigh on the dollar.
As reference points for the projected range, resistance for dollar-yen is seen at the 200-day moving average of ¥158.55 and the recent high of ¥158.60, while the lower boundary of the daily one-balance cloud at ¥156.63 is cited as a downside level.