USD/JPY breaks above 200-EMA as Japan election uncertainty weighs on yen

USD/JPY surged 0.8% to 158.45, clearing the key 200-period exponential moving average at 157.80 as political uncertainty ahead of Japan's upcoming election weakens the yen. The breakthrough marks a significant technical development, with the pair now trading at its highest level in three weeks. Market participants are positioning for potential policy continuity concerns, as election outcomes could impact the Bank of Japan's gradual normalization path. The yen's weakness is compounded by widening US-Japan yield differentials, with the 10-year spread hovering near 350 basis points. Technical momentum indicators turned bullish, with RSI climbing above 60 and MACD generating a buy signal. Immediate resistance lies at 159.00, coinciding with the June high, while the broken 200-EMA now acts as support. A decisive move above 159.00 could accelerate gains toward 160.00, though election results may introduce volatility.