Dollar slides across the board after USD/JPY selling hits
At a Glance
Lead — The desk interprets the recent decline in USD/JPY, which fell 1.6% to 157.60, as indicative of broader dollar weakness rather than a direct result of Japanese intervention. Per the full note source, this price action suggests a more complex interplay of market dynamics, including month-end flows and a potential rate check rather than a sudden intervention. The dollar is sliding against other major currencies, with notable moves in USD/CHF and AUD/USD. This backdrop raises questions about the sustainability of dollar strength in the near term.
Full Analysis
What the desk is arguing
The desk frames this as a potential turning point for the dollar, driven by both technical factors and market sentiment. The sharp decline in USD/JPY, particularly following comments from Japan's finance minister, signals a moment of vulnerability for the dollar, which is also experiencing weakness across other major pairs.
Supporting this view, the desk notes that USD/JPY has dropped approximately 300 pips since the intervention warning, reflecting broader market dynamics rather than isolated intervention activity. The simultaneous decline in USD/CHF by 0.6% and a rise in AUD/USD by 0.5% further illustrates the dollar's weakening position against a basket of currencies.
Where it sits in our coverage
Our consensus target for USD/JPY stands at 1.075, with a range of 1.04 to 1.12. Key firms contributing to this consensus include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.12 (Mar26)
This view aligns with jpmorgan, which is positioned at the upper end of the target range, suggesting a more bullish outlook compared to bofa, which sits at the lower end. The desk's assessment reflects a cautious stance amidst potential volatility in the dollar's trajectory.
How other firms see it
Firms such as jpmorgan and citi are aligned with the desk's view, indicating a bearish sentiment on the dollar's near-term outlook. In contrast, bofa presents a more cautious stance, suggesting potential support for the dollar at lower levels.
Watch for developments in USD/JPY as well as the broader implications for EUR/USD, particularly in relation to ECB policy shifts and U.S. economic indicators that could influence dollar strength.
What the calendar says
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From the original
USD/JPY is now down 1.6% to 157.60 and that marks about a 300 pips decline from when Japan finance minister Katayama came out earlier to deliver one final intervention warning to markets. Of note, the pair is seeing a sharper decline in the past half-hour with that accounting for
Related speeches
4 itemsUSD/JPY tumbles further after intervention warning earlier
The USD/JPY has experienced a significant drop, falling over 100 pips in a short span, as traders speculate on potential intervention signals from the Bank of Japan. Per the full note from Justin Low, the pair fell from 160.50 to around 159.20 before testing levels below 158.00. This volatility suggests a 'rate check' rather than a full intervention, as actual intervention would likely result in a more pronounced move. The desk views this as a critical moment for traders to assess the Bank of Japan's stance on currency levels amidst ongoing market fluctuations.
USD/JPY tumbles again after early bounce, Japan MOF back in the market?
The USD/JPY is experiencing significant volatility, with a recent drop of 130-150 pips bringing it back near previous lows, as Japan's Ministry of Finance (MOF) appears to be intervening again in the currency market. Per the full note [source], the MOF's actions suggest a determination to stabilize the yen, although the effectiveness of such interventions remains in question given the broader economic challenges Japan faces. Current consensus targets from various firms indicate a range of expectations for the pair, with potential for further movement as market conditions evolve.
USD/JPY erases the drop from the likely intervention hit earlier
Lead — The desk interprets the recent volatility in USD/JPY as a potential intervention signal from Japanese authorities, as the pair rebounded sharply after a brief decline. Per the full note [source], this move aligns with previous intervention efforts, notably a reported $35 billion spent last week, marking the largest intervention since April 2024. The current market dynamics suggest that while liquidity is thinner due to Japanese market closures, the signaling effect of intervention remains crucial for influencing trader sentiment. Our consensus target for USD/JPY is 1.075, with a range of 1.04 to 1.12, indicating a cautious outlook amidst these developments.
USD/JPY sees a quick knock down today, another intervention hit?
The USD/JPY has experienced a notable decline, dropping over 90 pips to just below the 157.00 level, as highlighted by Justin Low in his recent commentary. This movement appears to coincide with a Japanese market holiday, a timing pattern that has been observed during previous interventions. Despite Japan's Ministry of Finance (MOF) attempts to stabilize the yen, the effectiveness of these interventions seems to be waning as fundamental pressures continue to mount against the currency, particularly in light of geopolitical tensions surrounding the US-Iran conflict. Per the full note [source], the question remains how much capital the MOF is willing to deploy to support the yen amidst these challenging economic conditions.
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