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USD/JPY Price Forecast: Consolidation Ahead of Japanese Elections

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Jul 6, 2022 | DailyFX
Richard Snow, Analyst


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USD/JPY Price Forecast - The US Dollar Continues to Consolidate Against the  Japanese Currency

The rising cost of living continues to squeeze household incomes ahead of Japan’s upper house election on Sunday. A recent poll suggests that while the governing LDP party are likely to secure a majority victory, support for the current prime minister Kishida is waning. Approval ratings for Kishida came in at 54%, down from 59% three weeks ago.

Kishida is looking to secure greater support within his own party as a worsening inflationary outlook may lead to a move away from legacy “Abenomics” - Japan’s ultra-stimulative and supportive monetary policy that has remained since Prime Minister Shinzo Abe’s tenure.

With the result of the election looking like a mere formality, outsized moves in the yen appear unlikely but volatility is still likely to pick up as we head into the weekend.

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