Coordinated US-Japan FX intervention last week may have altered near-term bias for USD/JPY, analysts say, bolstering credibility of Tokyo’s actions.
The Japanese Yen (JPY) pared gains against the US Dollar (USD) on Tuesday, with USD/JPY rising to the mid-157.00s after hitting Monday’s low of 155.23. Analysts suggest last week’s joint intervention has shifted market dynamics, reducing extreme short positioning in the Yen.
Prior to the intervention, JPY net shorts reached their highest levels since 2024, according to Rabobank. Analysts expect positioning data to reflect a sharp reversal in the next release. MUFG/BTMU highlighted Japan’s plan to use the Federal Reserve’s FIMA Repo Facility, allowing access to up to USD60 billion daily without selling Treasuries.
The facility’s support is seen as a liquidity backstop, enhancing the credibility of Tokyo’s interventions. Analysts argue this could reduce the need for further Treasury sales and limit future intervention requirements, reinforcing expectations of a Yen bottom.