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February 5, 2026

USD/JPY Near 156.85 as Japan Election, Fiscal Plans Weigh on the Yen

Overview: Yen Weakness Accelerates Ahead of Snap Election

USD/JPY rallied to approximately 156.85 as markets priced in a stronger mandate for the LDP and expectations of expansionary spending, tax cuts and a more assertive security stance under Prime Minister Sanae Takaichi. The yen fell to a two‑week low on renewed fiscal concerns and wider yield differentials that favor the dollar. Previous coverage detailed a USD/JPY surge. Japan's Finance Minister has publicly flagged coordination with US authorities and market participants are watching intervention risk closely.

What moved the market

Three drivers have dominated the move: 1) political momentum for expansionary fiscal policy driven by the snap election, 2) rising US-Japan yield differentials and the prospect of higher US policy rates under a potential Fed leadership change (US nominee Kevin Warsh has been named in market discussions), and 3) fear of further JPY depreciation prompting talk of FX coordination or intervention from Tokyo. Follow-up analysis has tracked how USD/JPY nears 157 as intervention risk evolves.

Risks and technical context

Intervention remains the principal short‑term risk — a coordinated or unilateral action by Japanese authorities could rapidly strengthen the yen and reverse recent USD/JPY gains. Election outcomes or an unexpectedly aggressive fiscal package could increase volatility in Japanese bond markets and extend the currency move. Traders should also monitor shifts to safe‑haven flows or sudden changes in US rate expectations that could work against dollar strength. For longer-term context on fiscal issuance and yen weakness see the 11-month high analysis.

Trading opportunities and tactical ideas

Short‑term directional ideas include maintaining long USD/JPY exposure to capture near‑term yen weakness, while sizing positions to reflect the non‑linear risk of intervention. Buy‑the‑dip strategies may work if yield differentials remain favorable to the dollar and intervention is limited to verbal warnings. Consider using an automated execution plan or a Forex Trading Bot to implement disciplined entries, stops and scaling rules in a fast‑moving FX market.

ETH: Sharp Pullback Adds Cross‑Asset Volatility

In crypto markets, Ether (ETH) fell more than 5% to around $2,100 — trading below the investors' realized price of $2,310 and triggering over $228.5M in futures liquidations in 24 hours (~$137.2M longs). Retail wallets (100–10k ETH) sold in excess of 600k ETH over the past week, and a notable transfer of 316,185 ETH into Binance raised sell‑side pressure. See related coverage where ETH slides below $2,850 for additional context on the correction. Price rejection near $2,380 and current tests of $2,100 support mean a break below that level could target roughly $1,730.

Crypto trading implications

Downside in ETH heightens short‑term volatility and increases correlation risk for risk assets. Traders looking to exploit oversold conditions or buy accumulation zones should consider strict position sizing and automated risk controls; using a platform‑specific tool such as a Binance Trading Bot can help execute staged buys and manage liquidation risk during fast drawdowns. The oversold RSI and Stochastic indicators suggest a relief rally is possible, but decisive recovery requires a breakout above the 20/50/100/200‑day EMAs.

Practical checklist for traders

  • Set clear stop levels for USD/JPY trades to protect against sudden FX intervention moves. Maintain flexibility to reduce exposure on strong verbal or actual intervention cues.
  • For ETH and broader crypto trading, monitor large exchange inflows and whale activity closely; reduce leverage during clustered liquidations and use automated exit rules to limit tail losses.
  • Use algorithmic filters or an AI‑driven signal assistant to avoid emotional intraday decisions — automated trading and systematic sizing can help navigate high volatility.

Macro crossover and positioning

Keep an eye on US rate rhetoric and tech sector dynamics. A shift in the market narrative — for example, renewed safe‑haven demand or an equities rout tied to weaker tech/AI expectations — could strengthen the yen and pressure risk assets, including crypto. Conversely, a sustained risk‑on environment with widening yield differentials would support further USD/JPY strength and potentially stabilize ETH if macro liquidity conditions improve.

Conclusion and next steps

The USD/JPY move to near 156.85 highlights how politics and fiscal policy can override short‑term fundamentals and create both opportunity and sudden risk (notably intervention). At the same time, ETH's recent selloff underscores elevated crypto market fragility and the need for disciplined trade execution. Retail traders should combine macro awareness with robust risk management — consider automating entries, exits and scaling rules to stay disciplined across FX and crypto markets.

To test systematic approaches that blend signal generation and execution, try a Trade Assistant Bot or explore other automation tools at PlayOnBit. Whether you focus on forex trading or crypto trading, an AI trading bot can help enforce rules-based decisions and faster execution in volatile conditions.