OCBC warns Japan may act if the yen weakens past 160 against the dollar amid thin holiday liquidity conditions.
The Japanese yen’s decline is showing signs of slowing as U.S. Treasury yields and the dollar retreat, though USD/JPY remains near multi-decade highs. Analysts caution that Ministry of Finance intervention risk could escalate if the pair breaks above 160-161, particularly with U.S. and U.K. markets closed for holidays, exacerbating thin liquidity conditions.
While intervention might temporarily curb yen depreciation, OCBC notes it is unlikely to reverse the broader trend. A sustained yen recovery would require further Bank of Japan tightening and a more favorable external environment, including lower U.S. yields and reduced geopolitical risks.
Technical levels show resistance at 160 and 160.70, with support at 157.50 and 156.40. The daily chart maintains mild bullish momentum, though two-way risks persist.