Thoughts on the sudden fall in USD/JPY

Research evidence excerpt

Thoughts on the sudden fall in USD/JPY

Global Markets Research

First Insights 30 July 2026

Foreign Exchange - EMEA

Research Analysts

Global FX Strategy

Yusuke Miyairi, CFA - NIplc

We believe the BOJ’s July hike is highly unlikely; the Bank likely prefers yusuke.miyairi@nomura.com

avoiding hawkish surprises; further FX intervention risks remain +44 (0) 20 7102 4145

Dominic Bunning - NIplc

• Today's sudden USD/JPY drop could be due to the MOF’s intervention, based on the

dominic.bunning@nomura.com

decline's magnitude. Our initial rough estimate is ~$18bn of JPY buying. Tomorrow's +44 (0) 20 7102 4063

BOJ daily data will provide additional clarity on the size, but the MOF's data will not.

• Past episodes demonstrate the BOJ took hawkish actions following MOF's FX policy,

though we believe a hike at tomorrow's July meeting is highly unlikely. The BOJ has a

few hawkish signaling options available, but we believe it prefers to avoid surprises,

considering what happened in July 2024.

• We are more mindful of another MOF intervention after the BOJ's July MPM. The

IMF's currency status classification rule may incentivize the MOF to intervene within

three business days from today.

• FX Strategy wise, we have long EUR/JPY (conviction level 2/5) in our “watch list”,

which we believe it’s attractive to enter the trade, if the intervention risk eases.

However, as outlined above, we don’t think it’s sensible to initiate this position right

now before the BOJ’s July MPM. We will review this trade idea after the meeting.

A sudden fall in USD/JPY, which is similar in size to past intervention cases

On 30 July, from around 2:30PM London time, USD/JPY suddenly dropped sharply from

just below 163, to temporarily breaching 158. At this juncture, it remains unclear if this was