The Japanese yen fell to its lowest level against the U.S. dollar in more than seven months on Tuesday amid growing concerns over Japan’s fiscal outlook under incoming Prime Minister Sanae Takaichi. Political uncertainty in France weighed on the euro, while traders also monitored signs on when the U.S. federal government would reopen.
The dollar rose 1% against the yen to 151.86, marking the highest level since February 19. Takaichi’s victory and her promise of aggressive economic spending, coupled with criticism of the Bank of Japan’s rate hikes, triggered investor caution. Market expectations of a BOJ rate hike in October fell sharply to 26% from around 60% before her leadership win. Analysts remain divided on whether Japan will raise rates later this year amid persistently high inflation.
The euro declined 0.43% to $1.1659 after France’s prime minister resigned, casting doubt on fiscal consolidation and delaying the approval of the 2026 budget. Meanwhile, the U.S. dollar index rose 0.46% to 98.57, although concerns over a deteriorating U.S. fiscal outlook and a weakening labor market are expected to weigh on the greenback in the months ahead.
In the cryptocurrency market, Bitcoin fell 3.51% to $120,860 after hitting a record high earlier in the week.
