USDJPY is falling after the massive win for Takaichi, who gained more than two-thirds of the seats in parliament. Takaichi’s previous win caused a bearish rally for the yen, but this time the majority in government is seen as lower fiscal and political risks.

From April to January, the yen lost almost 14% of its value and got too close to 160, which seems to trigger FX intervention risks. After the New York Fed’s rate check and continued speeches from key figures in Japan’s economic administration, yen bears relented just short of 160. After the election, the direction of the wind seems to be changing.

©Bloomberg

Now, USDJPY’s retreat is starting to cause negative pressure on the dollar index as well, which is battling the 15-year-long trendline. This week, both the jobs and inflation reports will be released. Hassett hinted that job gains might be lower in coming releases, and Truflation is signaling falling inflation as an early indicator. Both could have a negative effect on the dollar index and USDJPY.

The first key support to watch is 154.50, a key horizontal level. If this support fails to hold against yen bulls, the upward trend channel might be tested in the coming days.