Market Outlook
November 3, 2026
Waiting for US Midterm Election Results; USD/JPY Holds Firm Below 158, with Oil’s Rebound and Middle East Headlines in Focus
Market Overview
The currency market lacks a clear direction as traders await the results of the US midterm elections. Tokyo markets were closed for Culture Day, keeping activity limited during the Asian session.
The dollar edged lower early in London, with USD/JPY dipping to 157.75 and EUR/USD rising to 1.1207. The selling then eased: USD/JPY recovered into the 157.90s, while EUR/USD slipped back to around 1.1195.
After falling sharply the previous day, NY crude futures rebounded into the $98 range. The US 10-year Treasury yield was little changed at around 4.91%, limiting the market’s impetus to move decisively in one direction.
Traders are likely to monitor US job openings and other data while reacting to election updates and headlines from the Middle East.
US Midterm Elections
The main event today is the US midterm elections. The results will not all be available tonight Japan time, so the vote count will need to be monitored from tomorrow onward.
The balance of power in Congress could affect the environment for fiscal policy, budget negotiations, trade policy, and other government initiatives.
If the administration and Congress are controlled by different parties, concerns about policy gridlock may rise, while some investors may welcome a check on abrupt policy changes. If Republicans retain control of Congress, the administration may be better able to advance its agenda, but concerns about fiscal expansion and a more hard-line foreign policy could also increase.
Neither outcome will automatically determine the dollar’s direction. The key is which factors the market prioritizes: fiscal policy, inflation, or the predictability of future policy.
Price moves triggered by early vote-count updates could reverse as the expected allocation of seats becomes clearer.
USD/JPY
USD/JPY is holding firm in the upper 157s.
The pair fell to 157.75 early in London but then recovered into the 157.90s, once again approaching today’s high of 157.97. It held up during the previous day’s dollar weakness, suggesting that demand remains below the market.
The immediate focus is whether the pair can move above 157.97–158.00. Even if it enters the 158s, failure to hold there could bring renewed attention to resistance overhead.
On the downside, today’s low near 157.75 is the first level to watch. If it breaks, the next question is whether the pullback extends toward the previous close around 157.56 and then into the lower 157s.
Expectations for another BOJ rate increase remain, while the current US–Japan interest rate differential continues to support USD/JPY. However, a faster yen decline could heighten intervention concerns, making traders cautious about chasing the pair higher near 158.
Oil and the Middle East
Oil prices are rebounding after the previous day’s sharp decline.
NY crude futures fell briefly into the $95 range on Monday amid hopes for a diplomatic resolution between the United States and Iran. They have since recovered into the $98 range, suggesting that supply concerns have not disappeared.
On Monday, President Trump referred to the possibility of an agreement with Iran and said that an attack after the midterm elections would not resume.
However, a statement from Iran’s deputy foreign minister this evening reportedly said that Iran had clashed with the United States on Qeshm Island and was at war. Reports pointing to diplomatic hopes are therefore competing with reports of a confrontation on the ground.
It would be premature to conclude from Monday’s fall in oil alone that geopolitical risks will continue to recede.
If oil moves back toward $100, inflation concerns and safe-haven demand for the dollar could strengthen. Conversely, confirmation of concrete progress in negotiations could bring renewed weakness in oil and the dollar.
US Economic Data
The following US data are due at 3:00 p.m. London time on November 3 (midnight Japan time on November 4):
- September JOLTS job openings
- September factory orders
- Final September durable goods orders
JOLTS job openings are forecast at 7.15 million, up from 7.079 million previously.
A stronger-than-expected reading could suggest resilient demand for workers, potentially lifting US yields and supporting the dollar. A weaker reading could increase caution ahead of Friday’s US employment report and weigh on the dollar.
Factory orders are forecast to rise 1.1% month over month, accelerating from 0.1% previously. Final durable goods orders are expected to be unchanged from the preliminary figures, at 1.8% month over month overall and 0.5% excluding transportation.
The ISM manufacturing index released on Monday came in at 55.5, above both the forecast and previous reading of 54.5. However, the final manufacturing PMI was revised down from its preliminary reading, and construction spending declined. US economic signals are mixed, making the market’s reaction in Treasury yields to today’s data particularly important.
With the midterm elections underway, the initial reaction to the data may not last.
Australian Dollar
As expected, the Reserve Bank of Australia raised its policy rate by 0.25 percentage points today. The Australian dollar edged lower after the announcement.
The vote was 6–3, with three members supporting a hold. The statement highlighted both persistent inflation and concerns about slowing economic activity. Governor Bullock’s press conference did not provide a clear signal of further rate increases.
AUD/USD fell from around 0.6995 ahead of the decision to a low of 0.6973, then recovered slightly. AUD/JPY also declined from around 110.45 to a low of 110.07.
The reaction suggests that the rate increase had already been priced in and that expectations for another hike have eased somewhat.
The next near-term test is whether AUD/USD can recover 0.7000. If the pair struggles to rebound even when the US dollar is under pressure, that would point to weakness specific to the Australian dollar.
Euro and Pound
EUR/USD rose to 1.1207 before slipping back to around 1.1195. The pair is below Monday’s high near 1.1240, showing that the rebound is not continuing in a straight line.
The immediate focus is whether EUR/USD can move above 1.1200 and hold there. With energy prices remaining high and fiscal concerns still present in Europe, it is important to see whether the euro can sustain its advance on dollar weakness alone.
GBP/USD is trading around the 1.34 level. A rate increase is almost fully priced in for this week’s Bank of England meeting, shifting attention to the vote split and the policy outlook that follows.
If the BOE sounds cautious despite the market’s expectations for further rate increases, the pound could fall even if the bank raises rates. As with the RBA decision today, the difference between the decision and what markets had priced in will matter.
Key Points for the Overseas Session
- Can USD/JPY break above 157.97–158.00 and hold there?
- If USD/JPY falls below 157.75, will the decline extend?
- Will US JOLTS job openings exceed the forecast of 7.15 million?
- Will US yields break out of their narrow range around 4.91%?
- Will oil rebound from the $98 range and test $100 again?
- Will reports point more strongly to diplomatic progress or military confrontation in the Middle East?
- Can the Australian dollar recover after falling following the rate hike?
- Will election updates trigger further position adjustments?
Scenario
The main scenario is for USD/JPY to look for direction in the upper 157s as markets await the election results.
If job openings are strong and oil remains elevated, dollar buying could return and push USD/JPY to test the 158s. However, caution ahead of the election and intervention concerns could still lead to a pullback after an advance.
Conversely, weaker job openings combined with lower oil prices and Treasury yields could take USD/JPY below 157.75 and bring the downside back into focus.
Today, watch not only the data but also whether subsequent moves in US yields and oil persist. Election results and Middle East headlines could change the direction after the data are released.
