G10 FX Strategy: Waiting for a Dip-Buying Opportunity

Research evidence excerpt

G10 FX Strategy: Waiting for a Dip-Buying Opportunity

Idea

June 26, 2026 07:59 AM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MG10 FX Strategy | Japan Koichi Sugisaki

Strategist

Waiting for a Dip-Buying Koichi.Sugisaki@morganstanleymufg.comMorgan Stanley & Co. International plc+ +81 3 6836-8428

David S. Adams, CFA

StrategistOpportunity David.S.Adams@morganstanley.com +44 20 7425-3518

USD/JPY is again approaching the July 2024 high, but the rally Morgan Stanley & Co. LLC

Andrew M Watrous

Strategisthas been driven more by broad USD strength rather than broad

Andrew.Watrous@morganstanley.com +1 212 761-5287

JPY weakness, suggesting that MoF's intervention may not be

Molly Nickolin

imminent. We see USD/JPY as close to fair value. We remain Strategist

Molly.Nickolin@morganstanley.com +1 212 761-3592

neutral on USD/JPY and await a clearer entry point for dip-

Morgan Stanley MUFG Securities Co., Ltd.+

buying. Hiromu Uezato

Key Takeaways Hiromu.Uezato@morganstanleymufg.com +81 3 6836-8431

The USD/JPY rally has shifted from yen weakness to broad USD strength. This

distinction matters for intervention risk, as authorities are typically more

sensitive to speculative yen selling than to generalized USD appreciation.

Intervention risk has increased, but imminent action does not yet appear likely.

The MoF has stepped up verbal warnings, but has not yet characterized recent FX

moves as clearly “speculative.”

USD/JPY looks close to fair value on our three-factor framework. The key inputs

remain US terminal-rate pricing, global risk sentiment, and Japan’s terms of trade.

Lower oil prices and weak global risk sentiment are supportive for the yen

outside USD crosses.

We remain neutral on JPY given the concern for the potential intervention and

await a clearer dip-buying opportunity.