Japan announced a new Prime Minister this morning. His name is Naoto Kan. Hopefully, he will have better luck than his four predecessors who resigned with only a year or less in service.

Resignations by Prime Ministers can have a significant impact on the country’s currency because its performance reflects investor sentiment. Forex traders typically do not like change and when Hatoyama announced his resignation, USD/JPY rose from 90.95 to 92.35 as the yen as plummeted against the U.S. dollar. To get a sense of how the yen could trade going forward, it is worthwhile to look back at how the currency behaved before and after the resignations of previous Prime Ministers.

History suggests that the recent gains in USD/JPY may be temporary, because the political uncertainty from the Prime Minister’s resignation will subside. The USD/JPY could resume it slide.

Kathy Lien is Director of Currency Research at GFT, and runs KathyLien.com.