Mr Biden withdrew from the presidential race and named Kamala Harris as his successor.

However, Harris is not more likely to beat Trump than Biden. The media are saying that positions in the Trump trade (higher tariffs, lower tax rates and a rising dollar) are being forced to close. But basically, there is a fair amount of long dollar/yen positions that have built up in the market. It is possible to push the dollar-yen down from the unwinding of such positions.

In fact, the unwinding of the yen carry trade continued and the yen surged against other currencies. The yen has continued to buy back. The unwinding of the yen short position continues on speculation that the direction of US and Japanese monetary policy will change, with the US cutting interest rates and Japan finally raising rates. The Mexican peso and Australian dollar are particularly strong. The dollar has temporarily dropped below the key support of 152 yen – the high in 2022 was 151.94 yen and in 2023 151.91 yen – but this time the dollar has dropped to 151.94 yen. A break below that level would likely result in further stop-losses.

The BOJ policy meeting will be held on Wednesday, and there are growing indications that the BOJ will be more bold in tightening monetary policy than initially expected, with influential members of the ruling party calling for a rate hike as a measure to weaken the yen. At the same time, as symbolised by Elon Musk’s statement that he would freeze construction of a factory in Mexico until after the presidential election, the realisation of a Trump presidency is likely to continue forcing the yen carry trade to temporarily withdraw from the market. However, with the Nikkei at 37,000 yen and
However, with the Nikkei plummeting to the 37 000 yen level, it is not clear whether the BOJ will actually raise interest rates next week. If there are leaked reports of no rate hike, the trend may change at once, and it is difficult to aggressively buy USD/JPY without seeing the BOJ policy meeting.

The situation is such that the yen is likely to continue appreciating in an air pocket-like manner. If the yen strengthens too much during this period, there is a danger that the chart shape will deteriorate and a ceiling could form. The high was 161.95 yen, so the price fell by 10 yen. The price has fallen a reasonable amount, so 38.2% or half of the price will be an important resistance during the rebound phase. 38.2% is 155.76 yen, so there is a reasonable amount of room for a rebound. It will depend on the BoJ policy meeting to see whether the yen has entered an uptrend or is merely adjusting. If there is no rate hike, the USD/JPY will be bought on a rollback, and if there is a rate hike, the USD/JPY will be sold on a return to 157 yen.