Coordinated action by Japanese and US authorities capitalized on post-FOMC USD weakness, driving JPY higher amid unwinding long USD positions.
Japanese authorities intervened in USD/JPY markets following the July 29 Fed meeting, leveraging a sharp drop in the USD to support the JPY. The move followed a buildup of speculative long USD positions, which reached their highest levels since September 2024 before being unwound post-meeting.
Prior to the intervention, the Ministry of Finance had not acted in FX markets since late May, as the USD’s strength pressured the JPY. The Fed’s decision to hold rates, despite some market bets on a hike, triggered profit-taking in the USD, amplifying the JPY’s rebound.
The US Treasury cooperated via the FIMA Repo Facility to prevent forced Treasury sales, reinforcing the coordinated effort. The intervention marked a rare alignment of policy actions to stabilize the currency pair.