USDJPY Rises on U.S. Data, Japan Election Uncertainty

The USDJPY currency pair has reached new multi-month highs, driven by strong U.S. inflation data and market anticipation surrounding Japan's upcoming upper house election. U.S. core goods CPI increases have boosted the dollar and U.S. yields, while the yen has weakened amid political uncertainty in Japan and recent tariffs imposed by the U.S. on Japanese goods. The Japanese election is seen as pivotal, with some polls suggesting the ruling LDP coalition could lose its majority, potentially increasing volatility in Japanese government bonds and the yen. Conversely, if the coalition retains power, it may stabilize both markets. Despite the LDP's unpopularity, the lack of a credible opposition and rising inflation are key election issues. Technical analysis indicates that as long as USDJPY holds above critical support, the bullish trend is likely to persist.