USD/JPY failed to hold the 158s even after several major central bank meetings. A trader's weekly review says a market trend that emerges after the US midterm elections may not hold through the US employment report during 2–6 November 2026.
USD/JPY could recover into the 158s but could not stay there in the week of 26–30 October 2026, according to a trader's weekly review on MQL5. Even after several major central bank meetings, the pair did not establish a sustained uptrend.
The pair rebounded to 158.35 early in the week, but at one point fell back into the 156s toward the weekend. Yen buying, driven by expectations of further BOJ rate hikes and declines in US technology stocks, capped gains more effectively than dollar buying prompted by US monetary policy.
A post-election trend may not hold through payrolls
The author plans to treat the midterm elections and the employment report as separate events. The election result may change expectations for fiscal policy and government borrowing, depending on the balance of power in Congress, while the employment report puts the Fed outlook back in focus.
As a result, a trend that emerges after the election may not hold through Friday's employment report. The author says the market reaction to the result matters as much as which party gains seats.
Yields and equities set the currency reaction
Stocks could rise if the result strengthens the government's ability to implement policy. Yields could also rise if investors become concerned about the deficit or increased Treasury issuance, and the impact on currencies will depend on what is driving any rise in US yields.
If US yields rise and equities fall, dollar buying and yen buying may compete. Even if US data are strong, a shift in the Japanese rate outlook could support the yen and limit gains in USD/JPY, the author writes.
What the author watches around payrolls
For the employment report, the author will look at payrolls, the unemployment rate, average hourly earnings and revisions to previous data. ISM and ADP releases ahead of the report may also offer clues about the economic outlook.
However, strong data do not automatically mean a stronger dollar. If employment and wages are strong but US yields do not rise, the news may already be priced in.
Source: MQL5: Traders' Blogs
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