Fundamental Market Analysis for November 2, 2026 USDJPY
Event to watch today:
17:00 EET. USD - ISM Manufacturing Index
USDJPY:
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The Bank of Japan's decision on Friday maintained the prospect of further rate hikes, although the current rate remained at 1.25%. The regulator raised its inflation assessment, and Hajime Takata proposed an immediate rate increase to 1.50%. His proposal did not receive a majority but indicated pressure in favor of faster tightening. This supports expectations for higher yields on yen-denominated assets.
For the dollar, the counterbalance remains the Fed's rate of 3.75–4.00% and the US economy's resilience noted by regulators. The interest rate differential remains significant. However, the Friday decline in US bond yields was accompanied by a strengthening yen: this reaction shows that the dollar's advantage is sensitive to revisions in rate expectations and does not guarantee pair growth.
Today, Japan's Finance Minister again confirmed readiness to respond to excessive speculative movements. This is a warning, not a report of intervention. Combined with the prospect of policy tightening, it limits the potential for yen weakening. The baseline scenario for USDJPY allows for a decline; strong ISM data and a resumption of US yield growth could cancel it out.
Trading idea: SELL 157.90, SL 158.25, TP 157.15
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