• The dollar traded near an over 2-month high against its peers.

• Traders price an 89% chance of a 25-bps Fed rate cut in November.

• Economists expect the next BoJ rate hike in March next year.

The USD/JPY price analysis shows that the bets for a Trump win are rising, boosting the dollar against the yen two weeks before the presidential election. Meanwhile, Japan’s general election might also affect the yen by changing the Bank of Japan’s policy outlook. 

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The dollar extended recent gains to trade near an over 2-month high against its peers. Bets ahead of the November US presidential election show Trump in the lead, supporting the dollar. A Trump win is bullish for the dollar, increasing the likelihood of high interest rates. However, the race is tight, and things might change in the time before the election. 

At the same time, markets are still digesting the new outlook for a gradual Fed rate-cutting cycle. A few weeks back, rate cut expectations indicated a 50-bps cut in November. However, that quickly changed with incoming data. Currently, there is an 89% chance of a 25-bps rate cut in November. 

The US will release business activity data before the policy meeting to show the state of the manufacturing and services sectors. 

Meanwhile, in Japan, the upcoming October 27th general election could change the majority in parliament and affect Ishiba’s position. Such changes could also change the outlook for monetary policy in Japan. The Bank of Japan has paused after implementing its first rate hike in March. Moreover, a recent Reuters poll showed that most economists expect the next rate hike to be in March next year. 

USD/JPY key events today

There won’t be any high-impact reports from the US or Japan today. Therefore, the dollar might extend its rally.

USD/JPY technical price analysis: Bulls make fresh highs

On the technical side, the USD/JPY price is climbing to make a new high in the uptrend. It trades well above the SMA, with the RSI in bullish territory. However, for some time, the price has stayed near the SMA. Consequently, the slope of the uptrend has slowed. 

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At the same time, while the price is making higher highs, the RSI has made lower highs, indicating fading enthusiasm. If this persists, the trend might reverse to the downside. However, if bulls maintain control, the price will revisit the 152.02 resistance level.

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