Latest yen intervention starting to develop a bit of a pattern
At a Glance
The desk believes that the recent interventions by the Bank of Japan (BOJ) indicate a growing pattern of resistance against a weakening yen, particularly as USD/JPY approaches critical levels. Per the full note source, the Ministry of Finance (MOF) appears to be actively managing the currency, with recent interventions reportedly costing around $35 billion. This aligns with our view that the yen's fundamental backdrop remains overwhelmingly negative, complicating the MOF's efforts to stabilize the currency. With the current consensus target for USD/JPY at 1.075, traders should remain vigilant as the market navigates these interventions.
Key Takeaways
Full Analysis
What the desk is arguing
The desk posits that the recent interventions by the BOJ are indicative of a strategic threshold being established by Japanese authorities to combat yen depreciation. Per the full note source, the MOF's directives to the BOJ come amid thinner liquidity conditions, suggesting a tactical response to maintain USD/JPY below the 157.00 level.
Recent trading patterns show strong buying interest around the 155.50-70 range, which has been consistent since last Thursday, indicating a potential floor for the currency pair. This is further supported by the technical resistance at the 100-day moving average, currently at 157.26, which may serve as a cap for any upward momentum.
Where it sits in our coverage
Our consensus target for USD/JPY is 1.075, with a range from 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 perspective aligns with the broader market sentiment, though it sits at the upper bound of the range, indicating a cautious optimism about the yen's potential recovery amid ongoing interventions.
How other firms see it
Firms like jpmorgan and citi are aligned with our view, suggesting a potential stabilization of the yen as interventions continue. Conversely, bofa holds a contrary stance, predicting further depreciation towards the lower end of the range.
Traders should also monitor related currency pairs such as EUR/JPY and AUD/JPY, as their movements could provide additional insights into the effectiveness of the BOJ's interventions and the overall sentiment in the forex market.
What the calendar says
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Market Implications
Traders should watch the 157.00 level closely, as sustained trading above this point could trigger further interventions. Additionally, the upcoming economic data releases may influence market sentiment and positioning.
USD/JPY — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 163.00 |
Citi | Bearish | 163.00 |
MUFG | Bullish | 146.00 |
From the original
It may be a Japanese market holiday today but it's always best to be reminded that the forex market doesn't sleep. Amid thinner liquidity conditions, it seems that the MOF has instructed the BOJ to step in once again today. The latest comes as USD/JPY claws its way back up to abo
Related speeches
4 itemsFX Daily: US holiday offers Japan intervention window
The desk interprets recent commentary as indicating that the current USD/JPY level presents a unique opportunity for Japanese authorities to intervene in foreign exchange markets, particularly given it coincides with a US holiday that typically witnesses lower liquidity. The strength of the dollar, bolstered by hawkish sentiments post-Federal Reserve, continues to keep USD/JPY well bid, which raises the stakes for a potential intervention by the Bank of Japan. Per the full note from ing-think, today's lower liquidity may provide the necessary window for intervention as USD/JPY already trades above its 2024 highs, allowing speculators to push levels if left unchecked. Market sentiment is currently leaning toward a priced expectation of two Fed rate hikes by year-end, which could further heighten volatility in the FX landscape.
A quick drop in USD/JPY before bouncing back up
The desk interprets recent price action in USD/JPY as indicative of diminishing effectiveness of intervention measures by Japanese authorities. Per the full note [source], the pair's drop from 157.70 to 156.75, followed by a rebound to around 157.30, suggests market resilience despite intervention signals. Current positioning reflects a cautious sentiment as traders weigh the potential for further intervention against a backdrop of low liquidity. This aligns with our broader view that USD/JPY may test higher levels in the near term.