Citigroup stated that even if Sanae Takaichi, viewed as a re-inflation advocate, becomes the next Prime Minister, the Bank of Japan's monetary policy normalization will not be impeded.

With the Federal Reserve expected to restart its rate-cutting cycle this month, "the narrowing of the US-Japan interest rate differential could exert downward pressure on USD/JPY over time," analysts including Osamu Takashima noted in their report.

The currency pair is projected to decline to approximately 140 in the fourth quarter after reaching a summer peak around 150.

Nevertheless, in a risk-on environment, downward pressure on the yen is intensifying, as Fed rate cuts could potentially boost US equity markets.

USD/JPY's downside potential appears currently limited around the 145 level, while 148 remains a key resistance threshold.