Japanese yen remains in focus as we look towards the end of the week

The Japanese yen is currently exhibiting high volatility among major currencies, with USD/JPY maintaining a large range after a downturn in Asia. The pair hit a low of 157.97 before rebounding to around 158.30, still below earlier highs around 158.60-70. Verbal interventions by Tokyo officials, particularly from finance minister Katayama, signal readiness to intervene if necessary. The situation is complicated by political factors that may affect currency movements, including the potential impact of upcoming elections on Takaichi's influence. The near-term bias has shifted to neutral since USD/JPY sellers broke below the 100-hour moving average. The currency's fate may hinge on how political developments unfold, including the opposition's attempts to challenge Takaichi. With positioning leaning towards yen weakness, there is a risk that sentiment could change rapidly as the elections approach. Investors continue to buy yen pairs, anticipating looser fiscal and monetary policy under a stronger Takaichi mandate, but political elements could present headwinds for upside in USD/JPY driven purely by politics.