Yen tumbled sharply in the Asian session as Nikkei 225 soared over 2,000 points, or 4%, to a new record high, after the Liberal Democratic Party elected Sanae Takaichi as its new leader. Markets quickly priced in expectations that Japan’s first female prime minister will pursue aggressive fiscal stimulus and stronger coordination with the private sector to revive growth.
A Takaichi administration is widely expected to overhaul Japan’s economic framework, emphasizing investment expansion and demand creation through public–private partnerships. Her longstanding support for Abenomics-style fiscal expansion has fueled optimism for renewed spending momentum, particularly in infrastructure and industrial policy.
Traders also anticipate that Takaichi will urge the BoJ to maintain its accommodative stance, dampening expectations for further tightening in the near term. Despite recent data supporting a mildly hawkish case, policymakers may tread carefully amid heightened political and fiscal uncertainty during the leadership transition.
Technically, EUR/JPY broke decisively above 175.41 (2024 high), confirming the resumption of its long-term uptrend. The next target lies at 38.2% projection of 161.06 to 173.87 from 172.24 at 177.13. Firm break there will open the path to 61.8% projection at 180.15.
In the medium term, EUR/JPY’s rise from 114.42 (2020 low) should now be heading to 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31.
