USD/JPY: Election risks keep Yen pressured – MUFG
By FXStreet Insights Team
Date Published: 7 Feb 2026 | Date Modified: 7 Feb 2026
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MUFG Bank analysts Lin Li, Michael Wan, and Lloyd Chan note that Japan’s 8 February election is reinforcing weakness in the Japanese Yen, with USD/JPY drifting back toward 160 after a brief correction.
MUFG Bank analysts Lin Li, Michael Wan, and Lloyd Chan note that Japan’s 8 February election is reinforcing weakness in the Japanese Yen, with USD/JPY drifting back toward 160 after a brief correction. Local media suggest Prime Minister Takaichi’s coalition may secure a lower-house majority, which MUFG warns could broaden fiscal spending expectations and keep upward pressure on USD/JPY and long-end JGB yields.
Japanese politics weigh on Yen
"Japan’s political backdrop is reinforcing downward pressure on the yen as USDJPY drifts back toward 160 after its brief correction to 152."
"Local reports indicate Prime Minister Takaichi’s ruling coalition is on track to secure a lower-house majority, supported by her strong approval ratings since taking office in October."
"This would however potentially create concerns over Japan’s fiscal discipline as the market may anticipate increased government spending, which may fuel upward pressure on USD/JPY and long-end JGB yields."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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