EURJPY Outlook in the Shadow of Political UncertaintyEUR/JPYOANDA:EURJPYftdsystemBoth the euro and the yen are facing political risks, making EURJPY a challenging pair for traders to navigate. In this environment, it may be best to assess fundamentals, politics, and technicals together. The yen is under pressure due to expectations of stimulus-driven fiscal policies. While that may be true, the Bank of Japan could still offset the impact, and fiscal stimulus could increase currency demand in the coming months, so it is not a too major concern for now. The more serious issue could be the collapse of the Liberal Democratic–Komeito coalition, which would weaken government leadership and increase political risk. JPY is expected to remain under moderate downward pressure in the medium term but is unlikely to collapse. Rising yields could attract investors back to the yen and help limit losses. The euro is under pressure from political instability in France, the ongoing war in Ukraine, and other smaller challenges that come with managing a large union. However, low inflation, a steady rise in PMIs, growing AI and tech investment, and higher defense spending all support the Eurozone economy. These factors could be positive for the euro, especially as the dollar’s dominance faces growing questions. If the Eurozone manages to reduce bureaucracy, continue investing in technology, and reform its financial markets, the euro could become a serious contender against the dollar, which increase the prospects of long term bullishness. In this environment, EURJPY is expected to continue moving higher in the medium term, and possibly in the long term as well. However, after the sharp upward move that followed Takaichi’s victory, a round of profit-taking may be due. The previous top was 175.400. The 174.775–175.400 zone could act as a potential bounce area if a short-term selloff occurs. Below 174.775, the “Takaichi gap” may attract market attention with expectation of a "fill the gap" move, which could lead EURJPY to retreat toward the lower line of its trend channel before finding support and bouncing from there. In both cases, medium term buying opportunites may come.