USD/JPY Exchange Rate Sees Record-Breaking Intervention from US-Japan Alliance

The Japanese yen has been under intense scrutiny following a record-setting US-Japan intervention that began on July 30, 2026. The coordinated action was aimed at preventing a further decline in the USD/JPY exchange rate, which had reached a 40-year low of ¥164 before the intervention.

According to FP Markets' Chief Market Analyst Aaron Hill, the intervention alone may not be sufficient to prevent the yen from weakening further. He believes that the Bank of Japan (BoJ) would need to increase its policy rate to send a serious signal to the market and incentivize repatriation back into the yen.

The US involvement in the intervention was primarily driven by concerns over a destabilizing spike in domestic bond yields, rather than a desire to prop up the yen. To shield the bond market from a sell-off, the US Treasury financed its share of the intervention by selling euros from reserves and buying yen.