Due to the overall easing of the US dollar and increased discussions about Japanese authorities intervening in the foreign exchange market, the USD/JPY has fallen slightly.

Lee Hardman, Senior Monetary Analyst for Europe, the Middle East, and Africa at Mitsubishi UFJ Bank's Global Market Research, said, "The verbal intervention of Japanese policy makers can help temporarily provide support for the yen

The USD/JPY briefly hit a high of 153.34 last week, but has since fallen to 151.98. The US dollar is still nearly 9% higher than the September low against the Japanese yen, and authorities seem increasingly concerned about the sudden depreciation of the yen.

Atsushi Mimura, Japan's chief monetary diplomat, said, "Japanese Finance Minister Kato and US Treasury Secretary Yellen discussed recent exchange rate trends in bilateral meetings and confirmed that they will continue to communicate closely

Mimura said, "Our view is that there is clearly a one-sided and rapid trend, and we are closely monitoring currency trends, including speculative trading, with a stronger sense of urgency

Mitsubishi UFJ analyst Lee Hardman stated that these remarks send a clear warning signal to market participants that if the yen continues to weaken as it has so far this month, Japan is prepared to intervene again to support the yen.

However, Mitsubishi UFJ believes that it is unlikely to intervene before the US election results are announced. He explained that this election is considered crucial for the broader performance of the US dollar against the Japanese yen and the US dollar.

If the Republican Party in the United States wins a big victory in the election, it may cause the US dollar to fall back to near the high point of this year against the Japanese yen, but a split in Congress may lead to the US dollar against the Japanese yen giving up some of its recent strong gains by limiting the space for fiscal policy easing, and help alleviate upward pressure on US yields.

Dutch international analyst Min Joo Kang pointed out that despite potential inflation rising, the Bank of Japan may keep interest rates unchanged this week. The market will pay attention to the Bank of Japan's assessment of the risks to the US economy and the depreciation of the yen, as well as its quarterly outlook report. At around 11:00 am Beijing time on Thursday, October 31st, the Bank of Japan will hold an interest rate decision.

He also pointed out that due to insufficient communication during previous interest rate hikes, the Bank of Japan will strive to improve communication. It is expected that the Bank of Japan may lower its GDP forecast for fiscal year 2024, reflecting a decline in production, while slightly raising its inflation forecast.

Kang believes that the timing of the Bank of Japan's next interest rate hike is uncertain, while Dutch International believes that the possibility of a rate hike in December is slightly higher than 50%, depending on the US election and financial market conditions.

USD/JPY daily chart