Japan: Political shift and fiscal debate shape Yen – Commerzbank

💡 DMK Insight

Japan’s political shift could shake up the Yen’s stability, and here’s why that matters: With Prime Minister Sanae Takaichi securing a two-thirds majority, traders should brace for a more aggressive fiscal policy. This could lead to increased inflationary pressures, especially with the proposed temporary VAT cut on food. A weaker Yen might follow as the Bank of Japan may feel pressured to maintain loose monetary policy to support growth. Keep an eye on the USD/JPY pair; if it breaks above recent resistance levels, it could signal a stronger dollar against the Yen. But don’t overlook the potential for a contrarian play. If Takaichi’s policies successfully stimulate the economy, we could see a rebound in Yen strength as investor confidence grows. Watch for economic indicators like GDP growth and inflation rates in the coming months. The real story is how these political changes will influence market sentiment and trading strategies, particularly for those holding long positions in Yen-denominated assets. Monitor the daily charts for volatility spikes and adjust your positions accordingly.