Ahead of tomorrow's U.S. and Japanese midterm elections, USD/JPY in the Tokyo market is expected to trade narrowly. While following developments in the New York market, the pair is technically expected to remain within a limited range.
In the New York foreign exchange market on the 30th, USD/JPY fell temporarily to ¥156.96 before rebounding to around ¥157.64. EUR/USD struggled to extend its decline after preliminary German consumer price data for October came in below expectations and U.S. long-term yields fell. EUR/JPY also fell in line with lower stock prices before recovering from its lows.
In today's Tokyo market, a wait-and-see mood is expected ahead of tomorrow's U.S. midterm elections, following the FOMC's monetary policy decision and the BOJ policy meeting. The FOMC kept its federal funds target range at 3.75–4.00%, raising expectations of a rate hike in December. The BOJ kept its target for the uncollateralized overnight call rate at 1.25%, and expectations of a rate hike at the next meeting remain elevated.
Technically, the daily midpoint is ¥157.52, with trading expected within the range between the upper cloud boundary at ¥158.44 and the lower boundary at ¥156.80. Bearish signals are appearing, including the short-term line falling below the base line and leading span 1 being below leading span 2.
IMM positions show speculative-sector net long yen positions of 101,591 contracts. Ahead of tomorrow's midterm elections, attention is focused on how the market will assess the impact of a blue wave or a divided government.