The Japanese Yen (JPY) continued to lose ground against the US Dollar (USD) in Monday's trading session, with USD/JPY rising above 159.00 and approaching the key 160.00 level. This movement underscores that the mere threat of intervention by Japanese authorities has not been sufficient to trigger a meaningful recovery in the Yen's value [1].
Strategists at Societe Generale emphasized that a sustainable rally in the Yen will require an upgrade to Japan's economic growth forecasts, rather than relying solely on rate differentials or intervention. They noted that current consensus expects average growth of 0.75% for this year and next, which is an improvement from previous months but remains significantly lower than pre-Gulf conflict levels when oil prices surged. This suggests that a more convincing improvement in Japan’s growth outlook is necessary before anticipating a sustained rebound in the JPY [1].
Meanwhile, FX analysts at BNY Mellon highlighted concerns about Japan's fiscal balance and pointed to recent portfolio flow data showing foreign investors accelerating sales of Japanese Government Bonds (JGBs). Last week, net outflows totaled ¥1.25 trillion, reducing year-to-date foreign net purchases to ¥4.99 trillion—the lowest cumulative level since early February. The analysts concluded that foreign selling of Japanese bonds and increased Japanese buying of foreign assets are weakening support for the Yen and leaving it vulnerable to further depreciation [1].
Strategists at UOB Group maintain a mildly negative bias on USD/JPY, but do not expect a significant Yen recovery in the near term. They observed that downward momentum is building, yet remains insufficient for a sustained decline. Looking ahead, they forecast that USD/JPY could edge lower within a 156.60/159.60 range over the next one to three weeks, noting that the pair has mostly traded in a range and that momentum is fading [1].
CONCLUSION
The Japanese Yen remains under pressure, with experts agreeing that intervention alone is unlikely to spark a sustained recovery. Instead, a stronger domestic growth outlook is seen as crucial. Portfolio flows and analyst forecasts suggest continued vulnerability for the Yen, with only limited downside expected in the near term.