The market widely anticipates that the Bank of Japan will maintain its current monetary policy stance for a sixth consecutive meeting, yet the 7-2 voting outcome has exerted pressure on the yen. As trade tensions ease and domestic inflation picks up, BOJ officials are expected to discuss conditions necessary to resume policy tightening. However, the newly elected Prime Minister, Sanae Takaichi, advocates for an accommodative monetary stance and opposes premature tightening measures, complicating the policy outlook. Japan's October monthly economic report indicates a modest recovery, supported by steady growth in capital expenditure. The report adopts a cautiously optimistic outlook, suggesting that Japan's economy, as the world's fourth-largest, is expected to gradually rebound alongside improvements in employment conditions. However, it also warns that uncertainties in U.S. trade policies pose downside risks to the recovery. Supported by increased investment in the software and digitalization sectors, Japanese capital expenditure shows a moderate uptick; private consumption exhibits signs of rebound, though its pace remains behind capital investment and exports due to ongoing inflationary pressures. Overall export stability persists, with sustained robust demand within Asia, though exports to the U.S. have declined since July due to tariff increases. Additionally, the report highlights a rise in corporate insolvencies in September influenced by labor shortages, though the persistence of this trend remains uncertain.

The Federal Reserve announced a 25 basis point reduction in the federal funds target range to 3.75%–4.00%, marking the second consecutive easing decision and the fifth cut since September 2024. The Federal Reserve indicated that U.S. economic activity is expanding modestly, employment growth is slowing, and the unemployment rate has risen slightly yet remains low. Inflation remains marginally above the target. The committee stated it will continue to assess data and risks to ensure the attainment of maximum employment and the 2% inflation goal. After the Federal Reserve Chair Powell's press conference, he stated that the balance sheet reduction has concluded, and potentially, an expansion may be warranted in the future to sustain liquidity and stabilize interest rates within the financial system. He emphasized that monetary policy remains data-dependent with no predetermined trajectory, and the possibility of a rate cut by year-end remains uncertain. Due to the government shutdown, policymaking has partly relied on employment data up to August; however, moderate inflation upticks suggest that year-end PCE inflation could approach approximately 3%. Despite signs of a softening labor market raising concerns, the Federal Reserve maintains a cautious stance overall, with future policy paths tending toward prudence and a slightly hawkish bias.

In the 1D timeframe, the Bollinger Bands are expanding upwards with the SMAs diverging positively, and the price has broken above the EMA12 with a strong bullish engulfing candlestick, continuing its upward momentum. The MACD exhibits a golden cross, and the RSI stands at 63, indicating strong bullish sentiment in the market. A breakout above key psychological level and the upper Bollinger Band is highly probable, with target prices around 154 and 154.6. In the 1W timeframe, the Bollinger Bands are similarly widening upward, and the SMAs are diverging positively with a golden cross formation. Meanwhile, the MACD shows an "angel's kiss" pattern, with the MACD line and signal line returning above the zero-axis, confirming ongoing bullish momentum. The RSI at 64 further signals strong bullish sentiment, with the potential for the price to advance towards 157 and 159. It is recommended to go long at the lows in the short term.

Trading Direction: Buy

Entry Price: 153.4

Target Price: 158.8

Stop Loss: 150

Support: 150, 148.5, 146.6

Resistance: 155, 156.7, 158.8