USD/JPY intervention risk grows as Japan holiday leaves yen exposed in thin liquidity
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
BNP Paribas | Bearish | 1.1500 |
UBS | Bullish | 1.1800 |
UOB | Bullish | 1.1800 |
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If there is one major currency pair worth keeping a closer eye on over the next couple of days, it is USD/JPY. The currency pair is trading back to around 157 after the yen fell roughly 2% last week, despite the BOJ raising its policy rate by 25 bps to 1.25%. The rate hike itself
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4 itemsJapan market holidays this week raise speculation of intervention to prop up the yen
FX 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.
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Japan market holidays this week raise speculation of intervention to prop up the yen