USD/JPY rises as Takaichi win signals BOJ policy continuity, defense spending

USD/JPY has pushed higher to 151.20, gaining 0.5% (75 pips) as Polymarket traders price in a decisive victory for Sanae Takaichi in Japan's upcoming election, with 78% probability of her becoming Japan's first female Prime Minister. The yen weakness reflects expectations of continued accommodative Bank of Japan policies under Takaichi's leadership, contrasting with the Federal Reserve's hawkish stance. Markets anticipate increased fiscal spending, particularly in defense sectors, which could further pressure the yen through expanded government debt issuance. Technical indicators show USD/JPY breaking above the 151.00 resistance level, with next targets at 152.50 (December highs). Support sits at 150.40 (20-day moving average). The election outcome could accelerate yen depreciation if Takaichi implements her proposed defense spending increases, potentially pushing USD/JPY toward the 155.00 psychological barrier amid widening US-Japan yield differentials.