Japan intervened repeatedly in forex markets during May holidays, source says

What the desk is arguing

The desk views Japan's recent forex interventions as a robust defense mechanism against the yen's depreciation, particularly in response to soaring energy prices linked to the Iran conflict. Per the full note source, the BOJ's aggressive spending strategy, amounting to approximately $67 billion, reflects a tactical approach to stabilize the currency during periods of low market liquidity.

The reported $32 billion spent between May 1 and May 6 highlights the urgency with which Tokyo is responding to external pressures. The interventions were strategically timed during Japan's holiday period to maximize their impact, indicating a calculated effort by authorities to mitigate further depreciation.

Where it sits in our coverage

Our consensus target for USD/JPY is 1.075, with a range between 1.04 and 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26) - citi: 1.12 (Mar26)

This perspective aligns closely with jpmorgan, which sees the yen under pressure, while bofa presents a more cautious outlook, suggesting potential for further declines. The desk's target sits at the upper bound of the consensus range, reflecting a belief in continued intervention support.

How other firms see it

Firms like jpmorgan and citi are aligned in their view that the yen may face ongoing challenges, particularly given the geopolitical backdrop affecting energy prices. Conversely, bofa holds a contrary stance, suggesting a more bearish outlook on the yen's trajectory.

Traders should also monitor the USD/JPY pair closely, as its movements will likely reflect the ongoing dynamics of BOJ intervention and energy price fluctuations. Additionally, the relationship between the yen and oil prices will be critical as Japan's import costs remain sensitive to currency fluctuations.

What the calendar says

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