Strategy Trade

Research evidence excerpt

Strategy Trade

Nomura | Strategy Trade 31 July 2026

view. However, until this political coordination occurs, uncertainty will remain elevated,

creating a window for JPY weakness to persist as markets discount the probability of a

near-term tightening.

3. FX intervention on its own is unlikely to change the trend of the JPY

We think that, unless market expectations for the BOJ’s monetary policy and the

government's fiscal policy stance change materially, MOF intervention is likely to produce

only temporary JPY strength. The USD/JPY price action since 30 July closely resembles

the pattern following the late-April intervention, which suggests that, if this latest

intervention continues to follow the same pattern, USD/JPY is likely to find support around

158 and then face a low probability of sustained declines below that level for now. The

risk/reward profile continues to favor JPY weakness, in our view, especially as the fall in

USD/JPY has been not sufficiently large, despite the MOF reportedly having used its

JPY6-7trn in its intervention on 30 July (source: Nikkei). So, the efficacy of the

intervention is now in question. The IMF's “three-business-day rule” may potentially

constrain MOF intervention frequency as well, though we note that this is not a binding

constraint. The primary risk to monitor would be sustained support from the US Treasury,

such as repeated rate checks by the New York Fed, which would signal stronger

coordination. However, absent such an escalation, the next intervention threshold for

USD/JPY is likely to be somewhat higher than the level triggered in this latest round,

supporting upside potential for both USD/JPY and cross-yen pairs. This dynamic

reinforces our view that JPY strength from intervention provides attractive entry points for