USD/JPY Tumbles as Japan's Intervention Threat Loses Credibility
The USD/JPY pair has been making new lows for months, and despite Japan's efforts to intervene in the market, it seems that their threat is losing credibility. The pair traded at 163.571 on Monday, down 0.13% from Friday's close near 163.78. This comes after a fresh forty-year low was printed for the yen at 163.99 in the prior session.
In contrast to other G10 currencies, the yen did not rally with the dollar on Monday, despite its broad decline against all major counterparts following the US-Iran strike pause. The underperformance of the yen is seen as a key datapoint in this market, suggesting that Japan's intervention efforts are structurally limited.
The path for the USD/JPY pair has been relentless, with the pair troughing at 152.46 on January 27 and printing 162.83 on July 1 as a forty-year low. Despite a central bank rate hike in June to its highest level since 1995, the yen has continued to depreciate by roughly 7.5% in six months.
Local reporting has noted that market participants are shifting from alarm to resignation, with some even viewing the 160-yen range as the new normal. This capitulation is seen as a late rather than early sign of acceptance.