USD/JPY tumbles further after intervention warning earlier

What the desk is arguing

The desk interprets the recent USD/JPY movement as indicative of a potential 'rate check' by the Bank of Japan rather than a full-scale intervention. Per the full note from Justin Low, the pair's rapid decline from 160.50 to below 158.00 highlights the sensitivity of the market to central bank signals.

The drop of over 100 pips in just ten minutes underscores the volatility surrounding the pair, suggesting that traders are closely monitoring the Bank of Japan's actions. If this were a genuine intervention, a more sustained decline of 300-400 pips would likely have occurred, indicating that the current movement is more of a tactical response by Tokyo.

Where it sits in our coverage

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

This view aligns with jpmorgan's target, which is at the upper end of the consensus range, while bofa presents a more cautious outlook at the lower end. The desk's analysis suggests a potential divergence from the more conservative estimates, particularly if the Bank of Japan signals a more aggressive stance on currency intervention.

How other firms see it

Firms like jpmorgan and citi are aligned in their bullish outlook on USD/JPY, anticipating upward movement in the pair as market conditions evolve. Conversely, bofa holds a contrary view, projecting a more bearish scenario based on anticipated economic conditions.

Traders should also keep an eye on related pairs such as EUR/JPY and AUD/JPY, which may reflect similar volatility patterns influenced by the Bank of Japan's policy decisions and market sentiment.

What the calendar says

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