Emergency Stop
In the early hours of trading on Monday morning, sudden and significant buying pressure within USDJPY has markets wondering: is this the signal that local authorities are taking another stab at active market intervention? In a critical week for FX, with central bank decisions and a slew of top-level economic data from across the globe, speculation over intervention in Japan still dominating the FX narrative. Around 2:30 AM, USDJPY hit a multi-decade high of 160 but wasted almost no time in correcting back into the low 159s. Sparking little cause for concern and easily attributable to private market limit order plays during illiquid conditions, it was only the next move that has sparked interest in possible FX intervention.
A few hours later and the next move saw USDJPY shave 3% from its value during a massive spike in trading volume. This would not be the first time that Japanese monetary authorities would target a psychological level at which to begin buying the Yen. The event occurred during a bank holiday in Japan, limiting but not eliminating the possible role of state authorities in today’s market. Officials have so far declined to comment, only adding to speculation of intervention.
The last round of confirmed FX intervention took place two years ago. In 2022, intervention failed to change the relentless drive higher in USDJPY. The size of the JPY buying was significant but aside from short term corrections, the market continued to shift higher over time. The backdrop today is different with a markedly changed BoJ from that in control during the last round of intervention. It is possible therefore that should yesterday have evidenced the latest in a campaign of monetary intervention that it may not be destined to the same fate as former attempts. Markets will be awaiting confirmation from Japanese authorities as to whether Monday’s intervention (if confirmed) was a one-off rebalancing event or if ongoing interventions are planned.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Next level
Charles Porter
Tue 1 Jul 2025
Next level EURUSD has managed a relatively smooth ascent to its current levels, around 1.18. That is despite significant resistance levels, most notably around 1.17. A large collection of option strike prices gathered around this key level and the price history of the pair shows us its significance. Sustained closes above this level since last […]
Daily Brief – A weaker Dollar: Trump vs. Powell
Charles Porter
Thu 26 Jun 2025
A weaker Dollar: Trump vs. Powell The Dollar continued to lose ground yesterday as the truce between Israel and Iran appeared to continue to hold. There has been a noticeable return to focus upon macro and monetary influences in major currency pairs. Yesterday, Fed Chair Jay Powell provided his semi-annual monetary policy report before the […]
Daily Brief – Whiplash
Charles Porter
Tue 24 Jun 2025
Whiplash A highly volatile start to yesterday’s trading session saw a flight to safety in markets. Despite the Dollar having lost much of its appeal as a safe haven lately, there was still an identifiable USD bid prior to and during the European open. We have identified recently how markets have clearly differentiated between general […]
