Post #15795

Yen Rebounds After Election — But Risks Still Linger USD/JPY saw a pullback as the yen caught a bid to start the week, snapping a six-day losing streak. The pair had pushed toward recent highs but is now correcting, with momentum cooling short term as markets reassess positioning after the election outcome. The yen firmed following Prime Minister Sanae Takaichi’s election victory, though the broader outlook remains mixed. Her pro-growth, potentially stimulus-heavy agenda raises concerns about Japan’s fiscal path, which typically weighs on the currency, but it could also fuel inflation and pull forward expectations for further Bank of Japan rate hikes. Officials have reiterated they are watching FX moves closely, keeping intervention risk in the background and limiting extreme upside in USD/JPY. Near term, volatility is likely as markets balance fiscal expansion, debt concerns, and the policy response from the BoJ. - Alan