[DAILY NOTION] FXEMPIRE - USD/JPY Forecast - Oct 27, 2020

The Dollar/Yen advanced on Monday, bolstered by safe-haven bids amid surging coronavirus cases in Europe and the United States as well as the lack of progress on a U.S. fiscal stimulus package.

At 20:17 (GMT), the USD/JPY is trading 104.849, up 0.146 or +0.14%.

Reuters reported on Monday that the United States, Russia and France set new daily records for new COVID-19 infections as a second wave swelled across parts of the Northern Hemisphere, forcing countries to impose new curbs. 

What's Next?

There are two schools of thought about the election that could influence the direction of the USD/JPY over the near-term.

Some traders believe that a Joe Biden victory next week, especially if the Democrats win control of the Senate, would likely herald a large U.S. stimulus package and weaken the dollar as the spending improves market sentiment.

With Biden’s poll gap narrowing a bit over the weekend, the risk tone can become a bit more cautious as we get closer to next Tuesday’s election. This could raise interest in the U.S. Dollar. However, if the poll numbers start to widen toward the end of the week, the markets could turn risk positive, which would be bearish for the U.S. Dollar and bullish for the Japanese Yen.

There is still some uncertainty, however, with some investors raising doubts about expectations of a Democratic sweep of the U.S. Congress.

“One of the permutations is a Democratic win, but no control of the Senate. Is it a complete blue sweep or is it something else?,” said Amo Sahota, executive director at currency advisory firm Klarity FX in San Francisco. “If we don’t get a blue sweep, then the stimulus won’t be big enough.”

Original source: https://www.fxempire.com/forec...