OCBC’s Christopher Wong says USD/JPY’s recent rally is moderating as UST yields and the Dollar ease, but the pair remains elevated. The bank warns Ministry of Finance intervention risk could rise if USD/JPY breaks into the 160–161 area in thin holiday liquidity. More durable Japanese Yen recovery would still require further BoJ tightening and a friendlier external backdrop.

Yen gains need more than intervention

"The recent run-up in USDJPY is starting to moderate slightly amid the pullback in UST yields and USD. Risk of MoF intervention may potentially rise if USDJPY pushes through the 160/161 area in coming sessions, especially during thin mkt liquidity with both US and UK markets out on Mon."

"Thin markets can amplify the impact of intervention, but intervention alone is unlikely to change the broader direction of travel for JPY. At best, it can slow the pace of depreciation and send a clear signal that policymakers are uncomfortable with disorderly moves around those levels"

"For JPY to recover more meaningfully, it would take more than just leaning against the wind. The BoJ likely needs to tighten further to get back ahead of the curve, while the external backdrop also needs to improve (i.e. geopolitical risks de-escalate, oil prices ease and US yields pull back)."

"Mild bullish momentum on daily chart intact while rise in RSI moderated. 2-way risks likely from here."

"Resistance at 160, 160.70 (previous high). Support at 157.50 (100 DMA, 38.2% fibo), 156.40 (50% fibo retracement of 2026 low to high)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)