• EUR/JPY rises ahead of the parliamentary vote expected to confirm Sanae Takaichi as Japan’s next prime minister.
• Japan’s LDP forms coalition with Ishin to promote expansionary fiscal policies and implement spending reforms.
• The currency cross receives support from weakening safe-haven demand amid the easing US-China trade tensions.

EUR/JPY halts its four-day losing streak, trading around 175.80 during the Asian hours on Tuesday. The currency pair strengthens as the Japanese Yen (JPY) weakens ahead of a parliamentary vote likely to confirm Sanae Takaichi as Japan’s next prime minister.

The Liberal Democratic Party (LDP) formed a coalition with the Japan Innovation Party (Ishin), with both parties seeking to advance expansionary fiscal policies and spending reforms. However, uncertainty remains over the coalition’s stability and whether Takaichi will adopt a more hardline policy approach.

The Japanese Yen may find gains as the Bank of Japan (BoJ) board member Hajime Takata said Monday that the time was ripe for raising interest rates. The Japan’s central bank is widely anticipated to keep interest rates unchanged at next week’s BoJ meeting.

The EUR/JPY cross appreciates as safe-haven demand weakens amid the easing United State (US)-China trade tensions. US President Donald Trump also said he expects to reach a “fair deal” with China’s President Xi Jinping during their upcoming meeting in South Korea, signaling a possible easing of trade tensions. Disagreements over tariffs, technology, and market access remain unresolved ahead of their scheduled meeting in South Korea next week.

The Euro (EUR) struggled against major counterparts as investors weighed S&P Global Ratings’ downgrade of France against improving global risk sentiment. S&P lowered France’s credit rating to A+ from AA-, citing “elevated” budget uncertainty despite the government’s submission of its 2025 draft budget.