USD/JPY Pair Eyes Return to Two-Month Low Amid US-Japan Intervention Hopes
The USD/JPY pair has been showing signs of recovery after a three-day move near 157.80 during the European trading session on Thursday. The Japanese Yen (JPY) faced profit-booking after a significant jump last week, following the US-Japan joint intervention to counter excessive volatility and disorderly movements in the Japanese yen.
Financial markets expect the Japanese currency won't be able to sustain US-Japan joint intervention-driven strength unless it gets a boost from structural changes in the domestic economy. Yen positioning stabilizes as BoJ follow-through is seen key to renewed inflows, according to analysts at BNY Mellon.
They note that recent coordinated intervention has bought time but hasn’t materially increased foreign JPY holdings. Investors remain net long JPY, but exposure is well below H1 2026 levels and won't rebuild without credible domestic follow-through: Bank of Japan (BOJ) tightening, fiscal consolidation, and structural reform.
Hopes of US-Japan intervention again are high, as Japan Finance Minister Satsuki Katayama confirmed earlier this week that Japan “won't hesitate to carry out more forex intervention with the US”. On the US Dollar front, investors shift their focus to the US Nonfarm Payrolls (NFP) data for July.