Yen: Why Bessent backs himself for successful intervention
At a Glance
The desk's thesis is that US Treasury Secretary Scott Bessent's recent intervention in the FX market signals a bullish outlook for the yen, which is considered significantly undervalued. Per the full note by Chris Turner, Bessent's faith in the yen is partly based on the potential for supportive monetary policy shifts in Japan as well as the historical context of successful interventions. Current consensus sees the yen at 160.47, with a broad expectation of revaluation as firms project targets ranging from 145.00 to 161.71 for March 2026 across the market. Watch USD/JPY dynamics closely for any further indications of strength following the intervention, as this could pivot market sentiment dramatically.
Key Takeaways
- 01Bessent's intervention indicates confidence in yen appreciation.
- 02The desk views the yen as currently 20% undervalued against the dollar.
- 03Consensus price targets for JPY are directing upward from current levels.
- 04Market participants are advised to closely monitor the implications of this intervention.
Full Analysis
What the desk is arguing
The desk argues that the intervention by Treasury Secretary Scott Bessent signals a renewed conviction that the yen is undervalued and poised for appreciation. As noted by Chris Turner, Bessent's background as a hedge fund manager informs his confidence, and strategic timing is key in FX interventions, especially considering the recent joint action between Washington and Tokyo. The strong sentiment behind the intervention reflects prevailing views that the yen could rise significantly given its current 20% undervaluation against the dollar.
Supporting this view, the desk points to consensus forecasts that depict the yen trading at levels around 160.47, with a broad median target range of 145.00 to 161.71 for March 2026 across multiple institutions like jpmorgan and goldman. The market is also analytical of the Fed's interest rate trajectory and any changes in Japan's monetary policy that may emerge subsequently.
The alternative view would suggest that if the intervention fails to yield immediate results, skepticism about the effectiveness of any unilateral FX intervention could lead analysts to revise their projections lower.
Market Implications
Watch USD/JPY for signs of recovery post-intervention, particularly movements towards the 155.00 target range which firms like **deutschebank** have set. The performance in this pair will likely influence broader market sentiment towards the yen's future strength. Positioning shifts may occur as traders adjust expectations based on further developments in U.S. policy interest rates.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
MUFG | Bullish | 1.1800 |
Danske Bank | Bearish | 1.1100 |
UBS | Bullish | 1.1800 |
From the original
Opinions Opinion by Chris Turner Yen: Why Bessent backs himself for successful intervention Published 07:10 FX United States In a recent podcast , I drew the conclusion that US Treasury Secretary Scott Bessent fancies his chances of the recent FX intervention being successful. We
Related speeches
4 itemsFX Daily: Bessent provides more rationale for yen intervention
The desk is highlighting an increased likelihood for further intervention in the yen market, driven by recent commentary from US Treasury Secretary Scott Bessent regarding the robustness of the Japanese currency. Per the full note, the dollar's strength is being supported by uncertainty around Federal Reserve policy and a resilient US economy despite a risk-on market environment. As the DXY trades close to 100, our outlook for USD/JPY remains influenced by geopolitical dynamics, financial market trends, and upcoming economic data releases. Notably, the consensus target for USD/JPY remains relatively weak, currently forecast at 150.0 by multiple firms.
Washington joins the fight for the yen
The desk anticipates a significant moment in the USD/JPY exchange rate following unprecedented joint intervention by the US and Japanese authorities aimed at stabilizing the yen. Per the full note from ING, this intervention marks the first coordinated action by the G7 since 2011 and suggests a shift towards a more assertive FX approach from the US Treasury. A decisive movement to the downside in USD/JPY will likely require continued softness in US economic data and perhaps new initiatives from Japan to repatriate capital. Currently, USD/JPY is trading at 157.0000, with a consensus target of 155.0000 for March 2026 across the market consensus, underscoring the ongoing volatility driving traders' sentiment and positioning.