BNY’s Geoff Yu and David Tam highlight that USD/JPY is grinding higher again after Japan’s recent intervention, with the Japanese Yen (JPY) having already surrendered much of its gains. They argue that a break above 160 would intensify pressure on authorities to adjust policy if a stronger Yen is truly desired, warning that failure to follow through undermines intervention as an effective tool.

Authorities face pressure above 160

“The latest round of intervention by Japan’s Ministry of Finance may have passed, but we expect more rhetoric from the government as USD/JPY resumes grinding higher.”

“Further JPY losses – especially a breach of the psychologically important 160 barrier – would likely add to pressure on Japanese authorities to change its comprehensive policy approach, if a stronger JPY is the policy objective, irrespective of U.S. data developments.”

“U.S. Treasury Secretary Scott Bessent acknowledged that the joint action was only a “signal,” and Tokyo needed to follow through.”

“Not doing so would question the very nature of intervention as a policy tool.”

“Policy credibility erosion will continue unfolding with every tick higher in USD/JPY.”

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