US-Japan Intervention Stabilizes Japanese Yen near 159.25

The Japanese Yen (JPY) has been stuck near 159.25 against the US Dollar (USD) following a sharp upward push, which has been attributed to a rare joint US-Japan intervention since 2011.

This event is significant as it is only the second FX market intervention of the year by Japan and the first joint participation by the US in over a decade. The involvement of the US Treasury adds massive credibility and reduces volatility risks in the US Treasury market, according to DBS Group Research.

UOB expects USD/JPY to consolidate in an intraday range of 158.95 to 159.60, with deeply overbought conditions limiting immediate upside beyond 159.60. However, UOB maintains an upside-tilted bias over a 1-3 week horizon within a broader 157.00 to 160.20 range.

The intervention has also helped alleviate unwanted selling pressure on other undervalued Asian currencies, specifically the South Korean Won (KRW) and Chinese Renminbi (RMB), according to DBS Group Research. Chang Wei Liang at DBS Group Research stresses that the Yen's historical undervaluation has begun to narrow following joint FX intervention by US and Japanese authorities.