Japanese Yen: Intervention drop seen capped near 153 – TD Securities

TD Securities strategists see the recent intervention-driven USD/JPY decline as cyclical rather than regime-changing. They expect December as the more likely timing for the next Bank of Japan (BoJ) hike and doubt sustained joint US‑Japan intervention support. Without strong US official flows, they see room for USD/JPY to drift toward 153.00 near term but maintain a year-end forecast of 159.00.

Intervention-led gains but year-end 159

"We argued in the last FX Weekly that the JPY was in need of near-term domestic policy support. The MoF intervention materialized shortly after our report, and the July BoJ meeting also provided hawkish forward guidance."

"We have pared back our tactically bullish JPY view after the latest price actions, and closed the AUD/JPY ratio put spread trade in our model portfolio. Despite the hawkish BoJ guidance, we continue to see December as the more likely timing for the next BoJ rate hike."

"In the absence of more direct US intervention involvement or hawkish BoJ, we would not see the FX regime as structurally different for JPY. The intervention-led USD/JPY selloff could continue moderately to 153.00."

"Without forceful US official flow to support the JPY, prevailing bearish momentum could push USD/JPY slightly lower to 153.00, but we would continue to maintain our year-end USD/JPY forecast of 159.00."

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