On July 31, a significant intervention in the foreign exchange market was conducted by the Japanese government and the Bank of Japan, with analysis from a private brokerage estimating the scale exceeded 4 trillion yen. This intervention involved large-scale dollar selling and yen buying, as evidenced by trading volumes and market movements in the Tokyo FX market [1]. According to Brown Brothers Harriman’s Elias Haddad, the intervention was a coordinated effort between Japan and the United States, confirmed by statements from both Japanese Finance Minister Satsuki Katayama and US Treasury official Scott Bessent. Both officials emphasized their willingness to act again if necessary to counter disorderly yen movements [2].
The immediate market reaction was a sharp appreciation of the yen, with the USD/JPY exchange rate plunging by roughly 2 big figures to an intra-day low around 155.23 during Tokyo trading hours [2]. Market participants observed that the intervention caused the USD/JPY to fall from the 155 yen range to the 153 yen range, particularly in the afternoon session, with technical indicators such as MACD and RSI signaling increased short-term yen strength [1]. Chart analysis suggested that 155 yen had been a strong resistance level, and the intervention established the 153 yen range as a new support, though further yen appreciation could occur if this level is breached [1].
BBH’s Haddad noted that historically, all three coordinated US FX interventions since 1998 have been successful, and he expects USD/JPY to gravitate toward 140.00, in line with the US-Japan real 10-year yield spread [2]. The exact size of Japan’s intervention will be disclosed by the end of August, while the US figure will be available around mid-November [2]. Market participants remain alert to the possibility of additional interventions, with traders emphasizing that future moves will depend on whether authorities decide to step in again [1][2].
There is consensus among market observers that if USD/JPY rises above 155, further yen weakening could occur, while a drop below 153 could trigger additional yen strength, underscoring ongoing market caution [1].
CONCLUSION
The joint FX intervention by Japan and the US on July 31 had an immediate and significant impact, sharply strengthening the yen and sending USD/JPY lower. Both governments signaled readiness for further action, and analysts expect the yen to remain supported in the near term. Market participants are closely watching for additional interventions and key technical levels in the USD/JPY pair.