Forex

USD/JPY softens after Takaichi electoral victory

Nikos Tzabouras Written by Nikos Tzabouras

USD/JPY Analysis

Incumbent Prime Minister Takaichi and the ruling Liberal Democratic Party (LDP) delivered a landslide victory in Sunday's election. NHK projected a supermajority of 274–328 seats in the Lower House, well above the 233 needed for a majority. [1]

Despite initial volatility, the yen strengthened after the elections, which is counterintuitive but also reasonable. The victory appears to have been largely priced in by markets, and the clear result reduces political uncertainty, supporting the currency. The yen is also underpinned by ongoing FX intervention risks and the Bank of Japan's tightening bias.

USD/JPY slips on a firmer yen and lingering USDOLLAR challenges arising from de-dollarisation and debasement trends. A break below the EMA200 and an RSI below 50 could open the door to a deeper decline below 154.33. However, a successful defence would reaffirm the upside bias and keep the path open to multi-year highs.

The resounding electoral victory of PM Takaichi may embolden her to pursue spending and tax-cutting measures, raising concerns over Japan's fiscal position. This is negative for the yen, which remains vulnerable to the same debasement pressures as the dollar amid mounting global deficits eroding confidence in major currencies. Meanwhile, the US dollar has shown resilience following the nomination of a Fed insider to succeed Chair Powell, easing independence concerns and limiting the scope for rate cuts.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.

As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.

References

1

Retrieved 02 May 2026 https://www3.nhk.or.jp/nhkworld/en/news/backstories/4588/

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