Global Markets Strategy

Research evidence excerpt

Junya Tanase AC (81-3) 6736-1270

JPMorgan Securities Japan Co., Ltd.

Ikue Saito (65) 6801-3154

JPMorgan Chase Bank, N.A., Singapore Branch

Global Markets Strategy

15 August 2026

JPY

example, below 150). In this respect, media reports that

the US intervention was conducted in EUR/JPY rather

than USD/JPY (and in a fairly small amount) suggest that

US authorities have no intention of pushing down the

USD. There is also speculation that the US has requested

accelerated BOJ rate hikes as a condition for participating

in yen-buying intervention, and in fact expectations for

BOJ hikes have risen after the intervention. However,

amid strong market concern that BOJ policy could fall

behind the curve under government pressure, higher

expectations for BOJ hikes—and even an actual acceleration of hikes—have become less likely to translate into

yen appreciation. In light of the above, we maintain our

medium- to long-term view that the yen will continue

to weaken and keep our year-end target for USD/JPY

at 164 (see note).

Figure 1: J.P. Morgan Forecasts

Source: J.P. Morgan.

Even coordinated intervention and accelerated BOJ rate hikes are not sufficient to halt

yen depreciation

On July 30, Japan’s MOF conducted yen-buying FX intervention for the first time since May 6. Even more surprising was that on July 31, the US Treasury decided to join

in coordinated yen-buying intervention for the first time

since June 1998. Following the intervention, USD/JPY

fell temporarily to 155.23 yen, but it has since rebounded

gradually and is currently trading in the 159 range. Looking at G10 FX performance since July 3, when our previous KCV was published, the JPY remains only mid-pack

despite the intervention.

Because coordinated intervention has historically been

undertaken only in crisis situations, we had previously

viewed the likelihood of coordinated intervention as low.

Therefore, the coordinated action was clearly a surprise,

demonstrating that Japanese authorities do not want USD/

JPY to rally significantly beyond 160 yen, and that US

cooperation was stronger than expected. Against this

backdrop, market caution regarding intervention has

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