The dollar/yen pair turned downward from the most recent high of 142.26 recorded on 11/21, and fell sharply to 139.18 yesterday. Considering the fact that multiple resistance points are falling from the upside, and that the candlesticks’ Ichimoku Kinko Hyo cloud has broken below the lower limit of the Ichimoku cloud and that a strong sell signal has finally been established. From a technical point of view, it can be judged that the trend is extremely weak. From a fundamental’s perspective.

1. There is strong awareness that the pace of US interest rate hikes will slow down.

2. Observation that the nominal interest rate differential between Japan and the United States will narrow (market as the volatility tends to be formed half a year ahead, the focus of the market has already been on whether the US Fed has already paused interest rate hikes as of May next year, whether the terminal rate has fallen below 5%,and whether the new Fed after Kuroda’s retirement. Has the discussion progressed on exiting monetary easing under the BOJ system).

3. Concerns about the reversal of the yen carry trade associated with the above (unwinding of dollar-buying/yen-selling positions).

4. Resumption of dollar selling against major currencies, a decrease in dollar-buying pressure due to the twisting of the US Congress, and other factors that suggest a fall in the dollar-yen exchange rate are increasing.

Based on the above, we continue to forecast a decline in the dollar-yen exchange rate as the main scenario in both the short-term and the medium-to long-term. In addition, as the US market is closed for Thanksgiving-Day today, the number of market participants is likely to drop sharply, leading to a stagnation in the overseas market.

Today’s expected range:139.00-140.00.

Analyst: Mr. Naoto Arase, Independent Analyst