Key points:

• Yen plummets across the board
• Snap election may be coming
• Euro, franc hit all-time highs

Another day, another surprise — long yen traders just can’t find the bottom as the yen sank to a new all-time low against the euro and the franc.

🗳️ Politics Nuked the Yen Again

• The USD/JPY pair ripped to ¥158.97, a 1.5-year high, after reports Japan may dissolve parliament and head into a snap election, spooking FX traders who hate uncertainty almost as much as negative interest rates.
• The yen face-planted, hitting 185.28 per euro and 199.12 per Swiss franc, fresh all-time lows that show capital is sprinting for the exits.
• Translation for non-FX nerds: when investors anticipate political spending and debt, they sell the currency and buy literally anything else.

💸 Elections = Spending = Weaker Yen

• Markets assume a snap election under Prime Minister Sanae Takaichi means fiscal stimulus, which is polite language for “the government opens the wallet and issues more debt.”
• More debt pushes bond prices lower and yields higher, but Japan already runs the world’s biggest debt pile, so traders expect the central bank to keep rates low and the yen soft.
• Stocks love it though — the Nikkei blasted to a record high as exporters get richer when the yen gets cheaper.

🔄 Carry Traders Smell Free Money

• A weak yen is also a gift to carry traders — that’s when investors borrow in cheap currencies like yen and invest in higher-yielding assets elsewhere, pocketing the rate difference.
• If Japan keeps rates near zero while the US stays higher, borrowing yen to buy dollars, stocks, or crypto becomes an ATM with legs.
• That’s why long-yen traders keep getting steamrolled — political risk plus easy money is a brutal combo for Japan’s currency.

Source: Tradingview