Japanese yen starting to slip away again, will Tokyo officials step in?
The desk views the recent depreciation of the Japanese yen as a significant concern, particularly given the Bank of Japan's (BOJ) limited success in its intervention efforts. Per the full note from Justin Low at investinglive.com, Japan has reportedly spent over $60 billion on market interventions since May, yet the yen continues to weaken, with USD/JPY trading above 157.00. This trend highlights the bearish fundamentals surrounding the yen, exacerbated by geopolitical tensions and rising costs, which complicate the BOJ's monetary policy outlook. As the market tests Tokyo's resolve, the potential for further intervention looms, but the effectiveness of such measures remains questionable given the current market dynamics.
What the desk is arguing
The desk believes that the Japanese yen's recent weakness signals a critical juncture for Tokyo's intervention strategy. Per the full note from Justin Low, despite Japan's substantial intervention spending, the yen has not strengthened, indicating a market resistant to Tokyo's efforts.
The current USD/JPY level above 157.00, alongside persistent geopolitical tensions, underscores the bearish sentiment surrounding the yen. Traders are likely to continue testing the limits of the Ministry of Finance's intervention capabilities, especially as the economic backdrop remains challenging for Japan.
Where it sits in our coverage
Our consensus target for USD/JPY is 1.075, with a range between 1.04 and 1.12. Key firms contributing to this outlook include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns with jpmorgan's stance, which anticipates a stronger yen, while bofa holds a more bearish outlook, suggesting divergence in expectations among market participants.
How other firms see it
Firms like jpmorgan and citi are aligned in their bearish outlook on the yen, while bofa and goldman present contrary views, suggesting a potential for greater yen strength in the near term.
Watch the USD/JPY pair closely, as its movements will reflect broader market sentiment and the effectiveness of any intervention by the BOJ.
What the calendar says
...
USD/JPY — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Goldman Sachs | Bearish | 165.00 |
MUFG | Bullish | 152.00 |
J.P. Morgan | Bullish | 142.00 |
Japan is estimated to have spent over $60 billion in intervening in the market recently and they don't have very much to show for it. The intervention efforts since the start of May in particular have not bore much fruit, with traders pushing back quite swiftly after the fact. And following their latest attempt last week, we're starting to see more of the same again.
USD/JPY is trading back up above the 157.00 level, as traders look to test the limits of Tokyo officials once more. The move higher comes despite a more mixed dollar, with broader markets still retaining some optimism over the US-Iran situation. While oil prices and bond yields are staying elevated, the dollar hasn't really made strides in the past week.
So, one can definitely argue that the yen side of the equation is also doing the talking here. The fact of the matter remains that the fundamental factors in play right now are overwhelmingly bearish for the yen. And as the US-Iran conflict prolongs, the negative impact will just continue to drag on.
There is a massive headwind for the Japanese economy, adding strain to both the financial and fiscal sides. Not only that, it also complicates the BOJ outlook amid cost-push inflation being put into the mix. We have covered those factors time and time again, and they continue to stick along with the Takaichi trade running in the background.
So, will we see Japan's ministry of finance decide to come back into the market again? The meeting between Bessent and Katayama today looks to be one for the optics more than anything else. However, it would be safe to assume that Bessent will also have delivered a subtle suggestion to Tokyo so as to not overdo it in terms of intervening in the market.
Besides that, the ministry of finance will also have to be wary of the IMF warning here . The issue for Japan now is that they have already shown their hand and the cards they want to play. Sure, they can tolerate a bit of pushback from the market after the recent intervention action.
However, are they going to let USD/JPY run back up closer to 160? I doubt so. It would just look extremely bad and traders will punish them even more the next time around.
That being said, it doesn't mean that Tokyo officials will find it easy to keep intervening in the near-term. Even outside of the fact of the IMF warning, their decision to intervene last week amid low liquidity conditions was arguably a poor choice of signaling. Yes, they might save some ammunition in doing so.
Sources & References
How we cover this story
Cross-firm research
USD/JPY Consensus Check: Spot at 155.88, Median Target 152.0 — Week of September 7, 2026
USD/JPY trades 2.55% above the 23-firm median Dec-26 target of 152.0, with a 25.5-point dispersion range signalling deep disagreement on the BoJ-Fed spread path.
USD/JPY Consensus Check: Spot at 156.25, Dec-26 Target 152.0 — Week of September 6, 2026
USD/JPY trades at 156.25, roughly 2.80% above the 23-firm median Dec-26 target of 152.0, with a 25.5-point dispersion signalling deep disagreement on the BoJ-Fed spread path.
USD/JPY Consensus Check: 156.25 Spot vs 152.0 Target, Week of September 5, 2026
USD/JPY trades 2.80% above the 23-firm Dec-26 consensus of 152.0, with a 25.5-point dispersion range signalling deep disagreement on the BoJ-Fed spread trajectory.