⬤ USD/JPY has staged a solid comeback, climbing back to the 61.8% retracement level of its recent decline as the yen continues losing ground across major pairs. The recovery is clear on multiple timeframes, with price action finding its footing after the latest pullback. The pair is now trading above the daily Ichimoku cloud again, which improves the technical outlook in the short term.
⬤ The rally is happening as Japan's political landscape draws more attention. Polls are pointing toward a possible landslide win for Takaichi's LDP, which reinforces expectations that fiscal policy will stay accommodative. Meanwhile, the market doesn't expect the Bank of Japan to step into the bond market anytime soon. These dynamics have kept pressure on the yen and given USD/JPY room to push higher.
⬤ From a technical standpoint, USD/JPY is holding above important support while reclaiming key retracement zones. The bounce has opened the door for a move toward 157.15, 157.70, and possibly 158.40 before the week wraps up. If the pair pulls back, the 155.65–155.70 zone is expected to attract buyers, assuming the broader dollar backdrop stays intact.
⬤ This move matters because it highlights how political expectations and policy divergence are shaping yen performance. If USD/JPY continues climbing, it could maintain upward momentum in the near term while also making the market more sensitive to any hints of official intervention. Looking past the weekend, if the projected election outcome plays out, markets may start watching more closely for signs of actual intervention as fiscal concerns grow.
