USD/JPY: Intervention risk back in focus – TD Securities

TD Securities strategists Alex Loo and Prashant Newnaha warn that JPY intervention risks are elevated as USD/JPY trades near 160, close to its 2024 high before Ministry of Finance action. They flag the upcoming Japan holiday, thin liquidity, and the Trump–Takaichi summit as catalysts for potential joint US–Japan action, though they doubt such moves would reverse the broader Dollar uptrend against the Japanese Yen.

TD flags elevated JPY intervention risk

"Japan starts a 3-day long weekend tomorrow but investors are on high alert given current USDJPY levels and the Trump-Takaichi summit in the US."

"JPY intervention risks are high again as USDJPY hovers around the 160 level, close to the 162 high in 2024 before MoF's intervention. Joint intervention from both US and Japan authorities is possible, exploiting thin liquidity conditions during the Japan holiday tomorrow. The last joint intervention was in 1998 and we could see USDJPY drop by ~5 to 6 big figures."

"Joint/unilateral interventions may help to fend off speculators, but we doubt it would be successful in reversing the upward trajectory in USDJPY now. USDJPY is tracking alongside the uptick in US yields and the move in oil, with any spikes in oil likely after the hits to oil infrastructure in the Middle East yesterday."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)