Investors remain heavily short yen after Japan’s joint intervention failed to sustain dollar weakness post-US jobs data.
Japan did not capitalize on Friday’s dollar retreat following weaker-than-expected US jobs data, signaling a passive strategy to slow rather than reverse the yen’s decline. The move leaves investors heavily short yen, with positioning at its largest since early 2024 before the initial intervention disrupted markets.
The yen rallied 5% over three trading days after the July 30-August 3 joint intervention, but Tokyo’s reluctance to press further may encourage traders to test its resolve. Fiscal constraints and the Bank of Japan’s gradual tightening pace add to skepticism about a sustained reversal.
USD/JPY technical levels, including resistance at 159.60 and 160.00 and support at 158.00-10, will likely guide renewed testing. Tuesday’s Japanese market holiday could provide a window for intervention amid thinner liquidity.