- USD/JPY has been on a strong uptrend since late January and has been on a six-session winning streak
- Prime Minister Sanae Takaichi's election win gives her absolute majority control of Parliament, safeguarding her stimulus-driven economic model
- An intervention by the Bank of Japan is still in the books should the USDJPY approach the 160 psychological milestone
Japan’s Prime Minister Sanae Takaichi secured a resounding victory in the February 8, 2026, snap elections. Her coalition got 352 out of 465 seats, and this gives her a strong position to push her economic plans, like tax cuts and stimulus. The USD/JPY pair has been going up since late January, and this news has just injected a fresh impetus in the market.
Takaichi’s Win and Implications for Japan’s Economy
Takaichi, often called Japan’s Iron Lady, has been pushing for “Sanaenomics”, which is like a newer version of former Prime Minister Shinzo Abe’s economic policies. This win means she can now put in place strong financial plans to help with living costs and boost growth through tax breaks and government spending.
ING Think analysts say this could help stocks by supporting corporate reforms, but it also brings up worries about debt, which could hurt Japan’s finances in the long run. They say that more spending might force the Bank of Japan to keep interest rates low to pay for the debt, which usually weakens the yen.
Monetary Policy Tug-of-War
The broad market consensus currently assumes that Takaichi’s victory will force the BOJ to retreat into a corner, delaying further rate hikes. This view has pushed USD/JPY toward the 157.00 handle. However, there is a contrarian case that her plans could cause prices to go up too fast. If her spending spree causes prices to overheat, the BOJ might have to raise rates more than expected just to keep its reputation.
J.P. Morgan’s outlook warns that if the budget shows more spending, it could put added downward pressure on the yen. It seems likely that policy will stay supportive in the short term, which helps growth but could make the currency unstable.
USDJPY Forecast
The USD/JPY is looking strong in the short term, trading near 156.60. The pivot is at 157.00 and the downside will prevail if resistance stays at that point. There’s primary support around 156.20, and even stronger support at the 10-day SMA at 155.23. On the upside, the primary barrier is 157.70, with a larger target of 158.35.
USD/JPY on the daily chart on February 9, 2026 with the main levels of support and resistance. Created on TradingView
Tip for traders: If you want to buy, think about doing it near 156.80. Place a stop-loss at 154.20 to protect against any sudden moves by Japanese officials. Keep your position size small, around 0.5%–1% of your funds, because there’s a high risk of intervention.
Takaichi won a two-thirds majority. This enables her to pass big spending laws and maybe change the constitution without much trouble from the upper house or other parties.
Her Sanaenomics focuses on big government spending and stimulus. Markets see this as a sign that the Bank of Japan will keep rates low, making the Yen less attractive and pushing USD/JPY higher.
The primary risk is Japanese government intervention. If the Yen weakens too rapidly toward 160.00, the Ministry of Finance may sell dollars to support the yen