Yen Suddenly Weakens—Markets Fear Japan's Deficit, But Intervention Looms
The Japanese yen weakened in the Asian session on Tuesday (January 27, 2026), retreating from the highs touched the day before. Pressure arose as investors renewed concerns about Japan's fiscal health amid Prime Minister Sanae Takaichi's large spending plans and tax cuts, coupled with a risk-on stock market mood that has reduced interest in safe-haven assets like the yen. Political uncertainty ahead of the February 8 elections also makes the yen vulnerable to selling.
However, the yen's room for weakness is not considered "free" because the market is also wary of potential intervention by Japanese authorities if the yen's movements are deemed excessive—Tokyo has even emphasized close coordination with the US on foreign exchange issues. Meanwhile, the US dollar remains stuck near multi-month lows due to speculation of a looser Fed policy and "sell America" sentiment, so the USD/JPY pair could remain limited ahead of the two-day FOMC meeting, which begins today and will determine the dollar's next tone. (az)
Source: Newsmaker.id
