+8,771 USD — USD/JPY Fails to Hold the 158s: US Midterm Elections and Payrolls Could Set the Next Direction

Trading results: 26–30 October 2026
Weekly total: +8,771 USD

Weekly Review

Even after several major central bank meetings, USD/JPY failed to establish a sustained uptrend.

The pair rebounded to 158.35 early in the week, but fell back into the 156s at one point toward the weekend. Yen buying, driven by expectations of further BOJ rate hikes and declines in US technology stocks, capped gains more effectively than dollar buying prompted by US monetary policy.

The key point is that USD/JPY could recover into the 158s, but could not stay there. In a market like this, treating a rebound alone as the start of a new uptrend can leave traders exposed to the selling that follows.

Trading losses from long positions in NZD/JPY early in the week were partly recovered by selling USD/JPY and buying gold later in the week. The weekly result was +8,771 USD.

FX Strategy Update

2–6 November 2026

Election Moves May Give Way to a New Direction After Payrolls

Next week, I will treat the US midterm elections early in the week and the US employment report later in the week as separate events.

The election result may change expectations for fiscal policy and government borrowing, depending on the balance of power in Congress. The employment report will put the Fed outlook back in focus through its signals on growth and wages.

In other words, a market trend that emerges after the election may not hold through Friday’s employment report.

Even if the market picks a direction early in the week, I will not assume it will persist. I will reassess the reasons for holding a position as new information comes in.

Read the Election Through the Bond and Equity Market Reactions

In the midterm elections, the market reaction to the result matters as much as which party gains seats.

Stocks could rise if the result is seen as strengthening the government’s ability to implement policy. Yields could also rise if investors become concerned about the deficit or increased Treasury issuance. The impact on currencies will depend on what is driving any rise in US yields.

I will watch these combinations:

• US yields rise and equities remain firm: Check whether buying in USD/JPY continues.
• US yields rise and equities fall: Dollar buying and yen buying may compete, so assess USD/JPY direction carefully.
• US yields fall and equities fall: Watch whether downward pressure on USD/JPY persists.

I will avoid trading solely on the initial reaction to election results and will look for confirmation that the move continues as the outcome becomes clearer.

For USD/JPY, Focus on What Happens After the Rebound

The near-term questions are whether USD/JPY can find support in the 156s and sustain a recovery toward 158.

If buying emerges in the 156s but the rebound is weak and the pair continues to make lower highs, downside risks remain. Conversely, if the pair rises alongside recovering US yields and stabilising equity markets, then buying on subsequent pullbacks could make a recovery into the 158s more credible.

On the Japanese side, I will watch Governor Ueda’s comments and other signals for any increase in expectations of further rate hikes. Even if US data are strong, a shift in the Japanese rate outlook could support the yen and limit gains in USD/JPY.

Assess Payrolls Alongside the Market Reaction

For the US employment report, I will look at payrolls, the unemployment rate, average hourly earnings and revisions to previous data. ISM and ADP releases ahead of payrolls will also offer clues about the economic outlook.

However, strong data do not automatically mean a stronger dollar.

If employment and wages are strong but US yields do not rise and the dollar fails to extend its gains, the news may already be priced in. Conversely, if weak data fail to trigger further selling, I will be cautious about chasing the decline.

I will not hold a trade in the face of price action that contradicts the view I formed from the data.

Watch Whether Sterling and the Australian Dollar Hold Their Gains After Rate Decisions

For policy decisions in Australia and the UK, the guidance about future meetings matters as much as whether rates are changed.

Even if a rate hike is delivered, a cautious message about further tightening could prompt investors to unwind positions built ahead of the decision. I will not treat an outcome that meets expectations as an automatic reason to buy more.

I will also assess the relative strength of the Australian and New Zealand dollars, including the New Zealand employment report. But yen crosses are also influenced by yen demand, so choosing the strongest currency against the dollar is not enough. I will assess the currency’s underlying strength separately from the direction of the specific pair being traded.

Do Not Assume Gold and Oil Will Repeat This Week’s Moves

Buying gold contributed to this week’s profits, but that does not mean the same trade will work next week.

For gold, I will monitor changes in US yields and the dollar, and check whether buying returns after any pullback. I will not keep buying a falling market based only on the idea that gold is a safe haven.

Oil could also turn sharply in response to Middle East headlines. I will stay flexible and avoid committing to one direction, taking account of both supply concerns that could drive prices higher and hopes for reduced tensions that could push them lower.

Trading Approach for Next Week

Next week, the priority is to preserve enough capacity to act on the next opportunity, even if one trade does not work out.

I will keep position sizes smaller around the election and ahead of payrolls, and wait for the initial post-release volatility to settle before considering an entry. If several accounts or instruments carry risk in the same direction, I will first calculate the combined potential loss.

I will set position sizes according to the loss I can tolerate rather than increasing trading volume because this week was profitable. Before entering a trade, I will define both the conditions for a potential gain and the conditions that would invalidate the trade idea.

Rather than continuing to chase the direction of the initial election move, I will build exposure gradually to trends that remain in place after the employment report.

Afterword: Notice Changes and Keep Going at a Sustainable Pace

Walking speed reflects a combination of physical functions, including cardiovascular fitness, strength and balance. Some research has found that people who walk faster tend to be in better health, but that does not mean walking faster will make someone live longer. What matters is noticing changes in your own condition, rather than comparing yourself with others.

The same idea applies to trading. If you focus only on headline profits or large market moves, you may miss changes in how you are trading. Are decisions taking longer than before? Are you managing losing positions less carefully? Are you entering trades without enough reason? These small changes can provide early signs that performance may be deteriorating.

The same applies when assessing the market: no single number is enough to draw a conclusion. Review several factors, including profit and loss, the number of trades, drawdown and whether you followed your rules. Keeping a daily record makes it easier to spot changes that short-term results may obscure.

When making improvements, it is important to proceed step by step while checking how things are going. Whether you are building a walking habit or reviewing your trading, steady progress within your limits is more sustainable than trying to get everything right at once.

Next week, I will look beyond the immediate results, check what has changed and make adjustments where they are needed.