Dollar slides across the board after USD/JPY selling hits
Lead — The desk interprets the recent decline in USD/JPY, which fell 1.6% to 157.60, as indicative of broader dollar weakness rather than a direct result of Japanese intervention. Per the full note , this price action suggests a more complex interplay of market dynamics, including month-end flows and a potential rate check rather than a sudden intervention. The dollar is sliding against other major currencies, with notable moves in USD/CHF and AUD/USD. This backdrop raises questions about the sustainability of dollar strength in the near term.
What the desk is arguing
The desk frames this as a potential turning point for the dollar, driven by both technical factors and market sentiment. The sharp decline in USD/JPY, particularly following comments from Japan's finance minister, signals a moment of vulnerability for the dollar, which is also experiencing weakness across other major pairs.
Supporting this view, the desk notes that USD/JPY has dropped approximately 300 pips since the intervention warning, reflecting broader market dynamics rather than isolated intervention activity. The simultaneous decline in USD/CHF by 0.6% and a rise in AUD/USD by 0.5% further illustrates the dollar's weakening position against a basket of currencies.
Where it sits in our coverage
Our consensus target for USD/JPY stands at 1.075, with a range of 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 view aligns with jpmorgan, which is positioned at the upper end of the target range, suggesting a more bullish outlook compared to bofa, which sits at the lower end. The desk's assessment reflects a cautious stance amidst potential volatility in the dollar's trajectory.
How other firms see it
Firms such as jpmorgan and citi are aligned with the desk's view, indicating a bearish sentiment on the dollar's near-term outlook. In contrast, bofa presents a more cautious stance, suggesting potential support for the dollar at lower levels.
Watch for developments in USD/JPY as well as the broader implications for EUR/USD, particularly in relation to ECB policy shifts and U.S. economic indicators that could influence dollar strength.
What the calendar says
...
AUD/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Rabobank | Bullish | 0.7200 |
ING | Bullish | 0.7100 |
MUFG | Bullish | 0.7000 |
USD/JPY is now down 1.6% to 157.60 and that marks about a 300 pips decline from when Japan finance minister Katayama came out earlier to deliver one final intervention warning to markets. Of note, the pair is seeing a sharper decline in the past half-hour with that accounting for about half of the drop. But at the same time though, it comes as the dollar is also sliding across the board against other major currencies.
USD/CHF is down 0.6% to 0.7860 while AUD/USD is up 0.5% to 0.7150 on the day. Even EUR/USD is now up 0.2% to 1.1700 after having been relatively muted earlier on in the session. As much as I'd like to pin this to Tokyo intervening, the price action doesn't really feel like it is one.
We're seeing tiny bounces in USD/JPY amid the sustained volatility in this 30 minutes and that doesn't quite fit the bill with actual intervention attempts. Typically, you'd see a quick and sudden 200-300 pips drop with no pushback whatsoever. So again, this could be a case of a 'rate check' being performed.
Circling back to the dollar though, the timing of all this is a bit tricky. Let's be reminded that this is also the end of April and month-end flows could also be a big factor driving part of the market move here. From earlier this week: Strong dollar selling expected for this month-end - Credit Agricole Besides that, equities remain in a bit of a bind but holding steadier overall.
S&P 500 futures are up 0.2% while European indices are keeping more mixed with the DAX up 0.3% but CAC 40 down 0.6% on the day. This article was written by Justin Low at investinglive.com.
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