There were two relatively big falls in USD/JPY on 23 January 2026, and Nikkei reported the possibility of a rate check by the NY Fed at the direction of the US Treasury. If this is true, market expectations for US-Japan joint intervention could rise. Then, efficacy of future actual intervention, if any, will likely be more significant. Historically, coordinated FX interventions among G7 economies have typically been implemented in response to emergency situations. For example, the most recent coordinated intervention occurred on 18 March 2011, following the Great East Japan Earthquake, in the form of coordinated USD-buying and JPY-selling intervention. If the current situation is indeed evolving toward US–Japan coordinated intervention, it would suggest that both the US Treasury and Japan’s MOF are taking recent movements in the exchange rate very seriously. As per our estimates, Friday’s market intervention was to the tune of $187 BN. Treasury Secretary Bessent had spoken to Japan’s finance minister Katayama this week about the selloff in Japanese debt, adding it had affected the Treasuries market. The Trump administration has previously signalled a desire to contain long-term US borrowing costs. Hence, we believe that a joint US Japan intervention to support JPY is now in action. This implies JPY is now unlikely to break July 2024’s high of 161.75. Hence it becomes now a sell on rise for USDJPY. But without actual hikes from BOJ, it might not meaningfully drift lower too, this giving a medium-term range of 152-160 till June’26.
