Yen Intervention Falls Flat: Currency Strategists Predict Dollar Strength Continues

A coordinated intervention by Japan and the US failed to prop up the yen, according to nearly every currency strategist polled by Reuters. The $36.58 billion injection on July 31- August 1 briefly pushed USD/JPY down from a 40-year low of 164 to approximately 156.5-157, but experts say it won't provide a sustainable fix for the yen's persistent weakness.

A Reuters poll found that nearly 95% of roughly 60 FX strategists assert that Japanese government interventions won't address the root cause of the yen's weakness, which is the interest rate differential between the US and Japan. The Bank of Japan has maintained ultra-accommodative policy while the Federal Reserve has kept rates elevated.

The yen carry trade is another factor affecting crypto markets. Investors borrow cheaply in yen to park proceeds in higher-yielding assets, including risk assets like Bitcoin. When the yen strengthens, these trades can unwind violently, contributing to sharp sell-offs across risk assets.