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The USD/JPY pair extends the rally to around 156.85 during the early Asian session on Thursday. The Japanese Yen (JPY) weakens to a two-week low against the US Dollar (USD) amid concern over Japan’s fiscal health under Prime Minister Sanae Takaichi’s expansionary spending policy. Traders will closely monitor Japan’s snap elections scheduled for Sunday. Takaichi’s ruling Liberal Democratic Party (LDP) is expected to gain more seats in the national election as she seeks voter backing for increased spending, tax cuts, and a new security strategy. Her expansionary fiscal policies raise concerns about Japan’s fiscal outlook, due to fears of debt-funded spending, which drags the JPY lower and creates a tailwind for the pair.  Markets remain alert for potential intervention from Japanese authorities. Japan’s Finance Minister Satsuki Katayama said on Tuesday that she will continue to closely coordinate with US authorities as needed, based on a joint Japan and US statement issued in September last year, and respond appropriately. Intervention fears could boost the Japanese Yen and act as a headwind for the pair in the near term.  On the USD’s front, US President Donald Trump on Friday nominated Kevin Warsh to succeed Jerome Powell as the next Chairman of the US Federal Reserve (Fed). Expectations that Trump’s pick to head the US central bank would favour maintaining elevated interest rates could boost the Greenback against the JPY in the near term.  Japanese Yen FAQs The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The…

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Filed under: News - @ February 5, 2026 12:27 am