18.07.2025 15:13

Japan's upcoming Upper House election on Sunday holds significant implications for the ruling Liberal Democratic Party (LDP)-Komeito coalition, according to recent polling data from Nikkei, Kyodo, and Asahi. The election's outcome could dramatically shift the political landscape, potentially jeopardizing the coalition's current majority. A total of 125 seats are contested, comprising half of the chamber's seats and a vacant Tokyo district seat. The coalition currently holds 141 seats, with 66 seats up for grabs in this election. Maintaining a majority requires securing at least 50 seats.


The election results will directly impact Prime Minister Ishiba's administration. Success would provide a three-year reprieve until the next major election (excluding the 2027 LDP presidential election). Conversely, losses could severely undermine his power and stability. The current political maneuvering has already led to promises of increased spending and tax cuts aimed at winning over voters, a strategy that has raised concerns among financial analysts. Moody's, for instance, has expressed anxieties about the potential negative impact on Japan's fiscal health and credit rating.


This political uncertainty is currently affecting the Japanese Yen (JPY). While the USD/JPY pair last traded at 148.58, according to OCBC FX analysts Frances Cheung and Christopher Wong, the bullish momentum on the daily chart persists. However, indicators suggest a potential shift, with the Relative Strength Index (RSI) approaching overbought territory. Support levels are anticipated at 147.15 (38.2% Fibonacci retracement) and 146.20, while resistance is projected near 149.40/70 (200-day moving average and 50% Fibonacci retracement of the 2025 high to low). The upcoming election outcome will undoubtedly play a crucial role in shaping the future direction of the JPY and the overall Japanese economy. The information was sourced from internet sources.