Japanese yen surges as Ishiba wins leadership race to become next Japan prime minister

When Takaichi won the first round of votes, it led USD/JPY to leg up higher to above 146.00. But in the head-to-head vote against Ishiba, she lost out and that’s resulting in a massive turnaround in USD/JPY now. The pair has tumbled from around 146.20 to 143.80 levels currently.

Takaichi was the most vocal among the candidates and she viewed that the BOJ was hiking rates too quickly. As such, when she was seen leading the race early on, traders moved to price in a softer yen. But as Ishiba wins out now, it is going back to the drawing board for USD/JPY.

The pair had been stubborn in resisting the post-Fed moves elsewhere throughout the week. But we might have to see the pair play catch up now, considering that this political risk is now out of the way.

The 200-hour moving average at 143.28 will be a key near-term level to watch out for now. Break below that and sellers will seize near-term control in the pair, allowing for more momentum to drive price lower.

This article was written by Justin Low at www.forexlive.com.