Takaichi’s trade caps yen upside

The USDJPY currency pair trades in a tight range around 158.50 during the Asian trading session on Thursday. The pair consolidates as the upbeat US dollar has offset the decent recovery in the Japanese yen.

Japan’s currency gains ground after remaining downbeat in the past few weeks amid fears of intervention. Chief Cabinet Secretary Seiji Kihara said in Tokyo on Wednesday that the government could intervene due to one-way excessive moves against the JPY.

However, the recovery move in the Japanese currency is expected to remain capped, with Prime Minister Sanae Takaichi’s trade remaining in traction.

Market experts are pricing in the victory of Takaichi in the early snap election, which she is expected to announce next week after dissolving the parliament’s lower house, Reuters reported. Takaichi’s win will help her get support for the budget, which is expected to be equipped with higher spending plans, an event that is favourable for Japanese equity markets and a headwind to the currency.

Meanwhile, the DXY Dollar Index holds onto gains near the monthly high of 99.26 amid expectations that the Federal Reserve will leave interest rates unchanged in the policy meeting later this month.

USDJPY chart by TradingView