−67,269 USD — USD/JPY Falls Despite a Firm Dollar: Policy Meetings Will Shape the Next Move from the 156s
Trading results: October 19–23, 2026
Weekly total: −67,269 USD
Weekly Review
This week showed that a firm dollar alone was not enough to justify buying USD/JPY.
USD/JPY climbed to 158.60 on October 20, but fell to 156.08 on October 23. It remained in the 156s through the end of the week. Concerns about AI and technology stocks, declining U.S. yields and broader yen buying all contributed to the decline.
Even if the dollar is strong against other currencies, USD/JPY can still fall when demand for the yen is stronger. Next week, it will again be important to distinguish the dollar’s broader direction from yen-specific movements.
In trading, long positions in gold and BTC, a short position in crude oil, and a long position in NZD/CAD, among others, resulted in losses. The weekly result was −67,269 USD.
Next week, the focus will be on participating in price moves that continue after the policy meetings, without rushing to recover the loss.
FX Strategy Update
October 26–30, 2026
Assessing What Could Keep the Yen Strong
The key question next week is whether yen buying triggered by falling equities will also be supported by the monetary-policy outlook.
If U.S. yields fall after the FOMC and the Bank of Japan signals that it is open to further rate increases, USD/JPY could face renewed downward pressure. Continued volatility in equity markets could also sustain demand for the yen.
Conversely, if U.S. yields rebound and the BOJ offers no clear indication of when it might raise rates, some of the recent yen strength could reverse.
The immediate levels to monitor are the low near 156.08 and whether USD/JPY can recover and hold in the 157s. Rather than focusing only on whether the pair briefly breaks below its low, watch whether rebounds continue to be capped afterward.
Assessing the FOMC and BOJ Together
At the FOMC, the rate decision will matter, but so will the Fed’s assessment of inflation and economic growth.
Concerns about higher oil prices could support U.S. yields. However, the market reaction may differ if concerns about economic growth or financial markets take priority. Do not draw conclusions from the wording of the statement or press conference alone; watch whether U.S. Treasuries are bought or sold.
At the BOJ meeting, focus on the inflation projections in its Outlook Report and the conditions it sets for further rate increases. Even if the BOJ expresses greater confidence in the inflation outlook, yen buying may not continue if markets interpret the next policy change as distant.
A clear move after the FOMC could be reversed by the BOJ meeting that follows. Avoid assuming that a move in the middle of the week will remain the trend through Friday.
Higher Oil Prices Could Support Both the Dollar and the Yen
December WTI crude futures settled at $103.27 on October 23. Concerns about the Middle East remain, making it difficult to rush into short positions.
The important point is that higher oil prices can affect currencies in more than one direction.
If inflation concerns push U.S. yields higher, the dollar could be supported. But if concerns about corporate earnings and economic growth weigh on equities, the yen could strengthen. For USD/JPY, it will be necessary to assess which force is stronger.
When considering a short position in crude, focus not simply on how high prices have risen, but on whether rebounds weaken after a decline and the market begins to make lower highs.
Do not automatically buy gold or BTC just because prices have fallen. Look for buying to return and for prices to hold their lows during the next correction.
If the Dollar’s Direction Is Unclear, Look for Relative Strength Between Currencies
With several policy meetings scheduled next week, trading opportunities may come from differences in currency strength rather than from the dollar’s overall direction.
For the euro, focus on the ECB’s assessment of the economy and whether concerns about France’s public finances ease. Even if the euro rebounds, remain cautious if the yield spread between French and German government bonds continues to widen.
For sterling, watch how bond markets respond to the UK budget. Higher UK yields do not necessarily support the pound if government bonds are being sold because of fiscal concerns.
For the Australian, New Zealand and Canadian dollars, Australian CPI and policy decisions in New Zealand and Canada could shift the balance of strength. In particular, set aside the previous view on NZD/CAD and wait to see which currency attracts sustained buying after the announcements.
Key Checks for Next Week
Focus on three areas:
- U.S. yields and the dollar: Do moves in the same direction continue after the FOMC, U.S. GDP and PCE data?
- Japanese yields and the yen: Does the BOJ’s communication strengthen policy expectations that support yen buying?
- Equities and oil: Which has more influence on the market: yen buying in response to falling equities, or inflation concerns driven by higher oil prices?
ECB and other policy announcements are also scheduled. Avoid treating the outcome of one event as definitive; assess the market’s reaction to the next piece of information as well.
Trading Approach for Next Week
Do not set a deadline for recovering losses. Reduce position sizes and rebuild a clear decision-making process.
When holding the same instrument across multiple accounts or strategies, first calculate the combined potential loss. Also manage positions such as gold and BTC together, since they could fall at the same time.
Avoid entering immediately after a sharp move on a policy announcement. Consider setups only after observing the subsequent pullback or rebound. When the hourly and daily charts point in different directions, do not rush into a trade.
Next week, focus less on predicting the outcome and more on identifying trends that remain in place after the policy meetings.
Afterword: Choose Your Focus Instead of Trying to Take Everything
When there is a lot of food in front of us, it can be tempting to reach for more, whether or not we are hungry. In those moments, it helps to decide what we actually want to eat, pay attention to how much we take, and include vegetables or fruit as well. The aim is not to deny ourselves everything we enjoy, but to make thoughtful choices.
I think the same idea applies to trading.
There are many markets to watch: currencies, gold, oil, equity indices and crypto assets. If we chase every market that is moving, the number of trades can grow before we notice, and we may end up taking positions with little justification.
It helps to decide in advance which markets and scenarios deserve attention. Choose setups that suit your strengths and set a level of risk you can accept. After the market moves, stay open to adjusting your view in response to price action and new information rather than clinging to the original scenario. This kind of preparation can help reduce impulsive trades.
There is also no need to open one position after another simply because you are afraid of missing an opportunity. Pause to ask whether the current setup is one you truly want to trade and whether you are already carrying too much risk.
With both food and trading, the goal is neither to avoid everything nor to pursue everything. Choose what you need and keep it in a manageable amount. Over time, that can become a sustainable habit.
Next week, instead of chasing every active market, let’s identify the setups we want and trade calmly according to our rules.
