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USD/JPY Price Forecast: Consolidation Ahead of Japanese Elections


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Jul 6, 2022 | DailyFX
Richard Snow, Analyst

USD/JPY ANALYSIS

  • Inflation showing signs of becoming more political in Japan as cost-of-living squeeze continues
  • Key USD/JPY technical levels to consider ahead of the election
  • FOMC minutes and services ISM on the cards before NFP data

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

INFLATION BECOMING POLITICAL IN JAPAN AHEAD OF ELECTIONS
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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