Forex News: Yen Slides Amid Japan Snap Election Talks

Yen Slides Amid Japan Snap Election Talks

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Tuesday, due to speculation that Japanese Prime Minister Sanae Takaichi may call a snap election.

According to reports, PM Takaichi may soon hold an early election in the first half of February to capitalize on high approval ratings and strengthen the parliamentary majority of her coalition administration.

Given Takaichi's high level of popularity, a victory would probably solidify her power to further advance the expansionary fiscal policies.

Minoru Kiuchi, Japan's economy minister, stated earlier in the day that the administration should strive for early parliamentary approval of the 2026 fiscal budget.

According to market analysts, Tokyo wants to increase expenditure in order to stimulate the economy, which could temporarily delay the Bank of Japan's policy-normalization position.

The JPY is also impacted by the uncertainties surrounding the BoJ and the split between China and Japan. Meanwhile, European stocks are turning in a mixed performance with investors largely staying reluctant to make big moves, choosing to wait for some crucial data for directional clues.

Concerns over tariffs and geopolitical worries appear to be rendering the mood cautious. A few stocks are seen moving significantly with investors reacting to some corporate news.

U.S. President Donald Trump's announcement of that any country that does business with Iran will now have to pay a 25% tariff on all trade with the United States is weighing on sentiment.

In the European trading today, the yen fell to a 35-year low of 185.54 against the euro, a record low of 199.45 against the Swiss franc and a 17-year low of 214.30 against the pound, from early highs of 184.30, 196.08 and 212.73, respectively. If the yen extends its downtrend, it is likely to find support around 186.00 against the euro, 200.00 against the franc and 216.00 against the pound.

Against the U.S., Australia, the New Zealand and the Canadian dollars, the yen slid to a 1-1/2-month low of 159.05, a 6-month low of 106.64, more than a 1-year low of 91.80 and nearly a 2-week low of 114.59 from early highs of 157.97, 105.97, 91.19 and 113.86, respectively. The yen is likely to find support around 160.00 against the greenback, 108.00 against the aussie, 93.00 against the kiwi and 115.00 against the loonie.

Looking ahead, U.S. NFIB business optimism index for December, U.S. ADP weekly employment data, Canada building permits for November, U.S. CPI data for December, U.S. new home sales for December, U.S. Budget Statement for December are due to be released in the New York session.

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