Live Updates > Live Update Details
2025-10-31 17:30:18
[Intervention Alarm Sounded: Bull-Bear Battle at the USD/JPY 155 Level] ⑴ Traders must seriously consider the real and rising risk of Japanese authorities intervening in the USD/JPY exchange rate, an action that could happen soon. ⑵ The USD/JPY is rising to levels where Japanese authorities previously sold dollars, and under pressure from the US, they are likely to act again. ⑶ The yen's weakness is a problem Japan needs to address, as it essentially equates to loosening monetary policy and exacerbating inflation, and the yen is currently extremely weak. ⑷ While the dollar's own trade-weighted index remains weak, the yen's trade-weighted value is nearing its historic low reached last July. ⑸ As one of the most actively traded currency pairs, the USD/JPY's movement is clearly troubling the US government, and the US stance will determine whether and when intervention occurs. ⑹ As the USD/JPY rapidly climbs towards the 155 level, Japanese officials have begun warning of excessive exchange rate volatility, a clear signal that intervention is imminent. (7) The last intervention to sell dollars occurred in July 2024 (with the exchange rate near 162), and before that, in September 2022 (with the exchange rate around 152). (8) Historical interventions have resulted in significant exchange rate declines: to 127 in 2023 (a drop of approximately 25 yen), and to 139 last September (a drop of approximately 23 yen), providing ample justification for hedging against the next potential intervention and a surge in the yen. (9) A coordinated intervention backed by the United States could have a more significant market impact. (10) When the market lacks safe-haven assets, investors tend to buy dollars, further complicating the current complexities of the foreign exchange market.
