Japanese yen is on the verge of breaking through the 160 barrier again? Goldman Sachs warns that fiscal expansion in Japan after the general election will intensify selling pressure on the yen.

Notice that the US dollar is generally weakening, but Goldman Sachs points out that the fiscal outlook after the Japanese election continues to pose an upside risk for the USDJPY exchange rate. During the global trading session on Monday, the US dollar weakened slightly, but analysts believe that the results of the Japanese election could ultimately strengthen the upward pressure on the USD against the JPY as market expectations for increased fiscal spending by the Japanese government are rising. According to Goldman Sachs analysts, the prospect of a more expansionary fiscal stance in Japan is more likely to weigh on the yen rather than support it. The increase in government spending is expected to widen Japan's structural yield disadvantage and strengthen capital outflows, especially in the context of loose monetary policy. Goldman Sachs predicts that as investors refocus on the interaction between fiscal policy, yield differentials, and political risks, the implied volatility of USDJPY will rise again after a period of calm. Strategists point out that the market is once again approaching levels where currency stability becomes a policy concern. In this context, Goldman Sachs believes there is room for USDJPY to move higher and potentially break through the 160 level. Once the exchange rate continues to enter this range, the risk of official intervention will return to the forefront of trading considerations. However, analysts warn that the threat of intervention is unlikely to completely stop the yen's weakness. Instead, it usually leads to a more cautious stance in the short term, reducing risk appetite and slowing momentum rather than reversing the trend. Historical experience suggests that if underlying macro forces continue to favor yen weakness, this cautious sentiment can only be maintained for a limited time. Goldman Sachs points out that with Japan's fiscal trajectory after the election becoming a focus of attention, and with US bond yields still significantly higher than domestic Japanese assets, the risk balance remains tilted towards further depreciation of the yen. Therefore, volatility is expected to rise, and the market may continue to test higher levels while remaining vigilant against official countermeasures.