Will the US Dollar Index Enter a Real Rise?

   A price gap (a "gap") formed between the closing price of 147.44 yen on the 3rd and the opening price of 149.19 yen on the 6th. This gap, also known as a "window," often occurs on Mondays and reflects strong buying and selling sentiment in a particular direction. A window can take a long time to close, or it can remain unfilled. During the Asian session on the 7th, USD/JPY continued its slow rise to the latter half of the 150-yen range, bringing the August 1st high of 150.91 yen within sight. The election of the new Takashi Market President has reinforced market expectations of proactive fiscal and loose monetary policies, driving further depreciation of the yen. Neither the Liberal Democratic Party nor the Komeito Party holds a majority in either the House of Representatives or the House of Councilors. With a busy political schedule expected in mid-October, including the extraordinary Diet session and the Prime Ministerial nomination election, consultation and cooperation with the opposition parties are essential. As the new president's ability to implement policies remains to be verified, the market believes that expectations of yen depreciation, triggered by concerns about fiscal deterioration or delayed interest rate hikes, have reached a phase. The key to the continued upward trend of the US dollar against the yen remains whether the dollar can truly strengthen.  

   The US dollar index (DXY), which reflects the dollar's value against major currencies, rebounded from 96.218 on September 17th, rising to 98.605 on September 25th. While the downward trend since the beginning of the year continues, yesterday's close of 98.108 has broken through the upper resistance line established since January, suggesting that the US dollar index may be bottoming out. Delays in the release of US government economic statistics, such as the employment report, have caused the US dollar to lack direction. Currently, the euro's weakness, driven by political and fiscal uncertainty in France, and the yen's depreciation following the appointment of the new president, have contributed to the dollar's strength. Regarding the progress of the reopening of US government agencies, the market is focused on the successful passage of the interim budget. In the short term, the release of the Federal Open Market Committee (FOMC) meeting minutes on the 8th and the preliminary October University of Michigan Consumer Confidence Index on the 10th may provide opportunities for a spontaneous rebound in the US dollar. Against this backdrop, if the US dollar index can clearly break through the September 25 high of 98.605, it is expected to enter a genuine upward phase, potentially further boosting the USD/JPY pair.