Japanese Prime Minister Sanae Takaichi announces the dissolution of the House of Representatives and early general elections, triggering the “Takaichi trade” market sentiment, leading to the yen’s continuous depreciation against the US dollar, approaching 159. Market analysis indicates that Takaichi’s expansionary fiscal policies will keep the yen weak.
(Background: After record-breaking demand during internal testing, Bitget officially opens TradFi trading to all users)
(Additional context: Japan’s 40-year government bond yield breaks 4%, hitting a new high, while 20-year auction demand remains weak)

Table of Contents

• Yomiuri Shimbun reports: Takaichi cabinet plans to early dissolve the House of Representatives with 465 seats
• Sanae Takaichi confirms on January 19: Dissolution of the House of Representatives on the 23rd, general election on February 8
• “Takaichi trade” continues to ferment: Yen weakens, stock market oscillates at high levels
  • Exchange rate: Yen
  • Under pressure, USD/JPY approaches 159
  • Takaichi dissolves the parliament, TWD/JPY expected to stabilize above 5
  • Bond market and foreign capital movements: dual pressure on bonds and forex emerges
• Leveraged funds massively increase short positions on the yen, weekly growth hits a new high since 2015
• Wait a bit longer for cheap yen! Nomura Securities: only when it falls to 165 will official intervention occur
• Six key indicators to watch when trading USD/JPY exchange rate

(This article is a promotional piece written and provided by Bitget, and does not represent the stance of Dongqu, nor is it investment, purchase, or sale advice. Please see the disclaimer at the end of the article.)

Japanese Prime Minister Sanae Takaichi announced on January 19 that she would dissolve the House of Representatives on January 23 and hold a full election for 465 seats, igniting the “Takaichi trade.” The market structure of yen depreciation, stock market rally, and bond pressure has become clearer. The USD/JPY approached 159 at one point, while the TWD/JPY appreciated and stabilized around 5. Data from the Commodity Futures Trading Commission shows that leveraged funds sharply increased their yen short positions in one week, marking the largest increase since 2015. For those waiting for a cheaper yen, Nomura Securities traders expect intervention only if it drops to 165.

Yomiuri Shimbun reports: Takaichi cabinet plans to early dissolve the House of Representatives with 465 seats

As early as January 10, Yomiuri Shimbun disclosed that Prime Minister Sanae Takaichi was evaluating the possibility of an early dissolution of the House of Representatives. Subsequently, related news quickly fermented in the market, igniting the “Takaichi trade”: USD/JPY temporarily broke through 158, rewriting a near-one-year high, and Nikkei 225 futures surged simultaneously.

The market generally interprets that since Takaichi’s cabinet took office in October 2025, support has remained high at around 70%. Dissolving the House early and initiating an election at this time would help consolidate her political base. In terms of policy stance, Takaichi’s government is seen as a representative of “proactive fiscal policy + tolerance of a weak yen,” focusing on expansionary fiscal measures, national defense, and industrial investment, aiming to boost exports and stock performance through a weaker yen.

After the news broke, the forex market responded swiftly. In New York trading, USD/JPY surged about 0.6% to 0.7% in one day, reaching a high of 158.03 intraday, the highest in nearly a year, reflecting investors’ anticipation of a more relaxed fiscal and monetary environment after the election.

Takaichi confirms on January 19: Dissolution of the House of Representatives on the 23rd, general election on February 8

On January 19, 2026, Sanae Takaichi officially announced that she would dissolve the House of Representatives on January 23, the same day the regular session of the National Diet opens, and plan to announce the election on January 27, with voting on February 8, for a full re-election of all 465 seats.

According to Reuters, Takaichi’s early election aims to increase government spending, promote tax cuts, and accelerate national defense construction under a new security strategy. This will also be her first nationwide election since becoming Japan’s first female Prime Minister in October last year. If Takaichi successfully secures a stable majority in the House, it will facilitate her push for more aggressive fiscal and industrial policies, which is a key reason behind the recent market reaction of “selling yen, buying risk assets.”

“Takaichi trade” continues to ferment: Yen weakens, stock market oscillates at high levels

Following Takaichi’s official announcement of dissolving the House on January 19, the Japanese financial markets continued to fluctuate on the 19th and 20th, reflecting a re-pricing process regarding fiscal expansion and political uncertainty.

On January 20, 2026, the Nikkei 225 opened at 55,600, with a high of 55,600 and a low of 54,990, closing at 55,140. Possibly due to profit-taking after the dissolution news, the Nikkei index fell 1.1% in one day. Despite the short-term pullback, the index remained above the 55,000 level for the month, indicating that the medium-term structure of the “Takaichi trade” has not been broken.

Exchange rate: Yen

Under pressure, USD/JPY approaches 159

In the forex market, USD/JPY traded about 0.3% lower on January 20, with the rate around 157.66 before press time. Market analysis indicates that rising political uncertainty, coupled with Takaichi’s aggressive fiscal stance, continues to exert structural pressure on the yen.

Takaichi dissolves the parliament, TWD/JPY expected to stay above 5

Besides USD/JPY, the “Takaichi trade” is also clearly reflected in the TWD/JPY trend. As the yen continues to weaken, the TWD remains relatively stable, causing the TWD/JPY exchange rate to continue rising after mid-January. The four-hour chart of TWD/JPY shows oscillation around 4.98–5.02 yen from January 19–20, with a brief spike above 5.03 on the 13th.

Forex traders analyze that if Takaichi wins the February House election and continues to push expansionary fiscal, defense investment, and industrial subsidy policies, the medium-term weak yen trend may persist, and the TWD/JPY could maintain a relatively high level around 5.

(# Bond market and foreign capital movements: dual pressure on bonds and forex emerges

It is noteworthy that Japan’s 30-year government bond yield recently hit a record high, reflecting market concerns over future fiscal deficits and issuance scale, which also dragged down some financial stocks. The market is beginning to anticipate that foreign investors may reduce their Japanese bond holdings temporarily, shifting toward stocks or overseas risk assets.

) Leveraged funds massively increase short positions on the yen, weekly growth hits a new high since 2015

Capital flows in derivatives markets further confirm that the “Takaichi trade” is not just short-term sentiment but a structural bet involving hedging and leverage. According to the latest report from the Commodity Futures Trading Commission ###CFTC###, last week, leveraged funds increased their net short positions on the yen by 35,624 contracts, the largest weekly increase since May 2015.

( Wait a bit longer for cheap yen! Nomura Securities: only when it falls to 165 will official intervention occur

From the options market, institutional investors continue to accumulate bullish positions on “strong dollar, weak yen.” Sagar Sambrani, senior FX options trader at Nomura Securities London, pointed out that the demand for long USD/JPY positions remains stable: “Hedge funds’ demand for long USD/JPY structures persists, and we observe steady growth in single-option buys and leveraged buys. The market generally expects that official Japanese intervention will likely occur in the 160–165 range.”

) Six key indicators to watch when trading USD/JPY exchange rate

Recently, some investors have started using the panoramic exchange UEX### to trade forex, preparing for potential high volatility in yen markets.

Among these, the forex CFD trading mode provided by Bitget TradFi precisely meets this demand. Users can directly use USDT as margin to trade mainstream forex products including USD/JPY without opening a traditional broker account, without additional fiat currency exchange or bank transfers. For investors already holding stablecoins and closely monitoring yen movements, this offers greater flexibility in fund management.

Bitget TradFi platforms have built-in economic calendars and real-time event alerts: news sections and app notifications will pre-announce important events (such as Fed rate decisions, Bank of Japan monetary policy meetings, US non-farm payrolls, Japan CPI, etc.) with expected impact directions.

For USD/JPY trading, the most important indicators are changes in the US-Japan interest rate differential, including 10-year US and Japanese bond yields, as these are the main drivers of long-term USD/JPY trends. Also, speeches from the Bank of Japan and the Federal Reserve, as mentioned earlier, Nomura Securities indicates that the BOJ typically intervenes around 165, and such information can be found on Bitget TradFi.

![]###https://img-cdn.gateio.im/social/moments-26e8bde5fd-b1a11b39b1-8b7abd-e2c905(

Promotional disclaimer: The content of this article is provided by the contributor as a promotional material, and the contributor has no relationship with Dongqu. This does not represent Dongqu’s position. It is not investment, asset, or legal advice, nor an offer to buy, sell, or hold assets. Any services, plans, or tools mentioned are for reference only, and the actual content or rules are subject to the issuer’s announcements or explanations. Dongqu is not responsible for any risks or losses that may occur. Readers should conduct their own due diligence before making any decisions or actions.

![])https://img-cdn.gateio.im/social/moments-c4f284f251-a1f6bcccc5-8b7abd-e2c905(

)##