Japanese Yen: Joint intervention threat curtails selling – MUFG

FXStreet Insights Team FXStreet

MUFG’s Lee Hardman notes that the Japanese Yen has weakened modestly in Asia, with USD/JPY near its 200‑day moving average around 158.00 after recent joint intervention by Japan and the US. Japan is estimated to have bought close to USD 87 billion of Yen, while US participation is smaller but symbolically important. MUFG expects US intervention to remain limited and stresses that fundamental changes, including faster BoJ normalization, are needed for a sustained Yen recovery.

Joint action limits speculative yen pressure

"The yen has weakened modestly during the Asian trading session resulting in USD/JPY rising back up to within touching distance of the 200-day moving average at around 158.00 after hitting a low yesterday at 157.18."

"On balance, we expect US intervention to support the yen to remain relatively small in scale."

"While joint intervention may prove more effective at helping to provide support for the yen in the near-term, we still believe that it can only buy time."

"There will need to be a change in fundamentals as well to encourage a sustainable reversal of the yen weakening trend that has been in place over the last five years."

"More US pressure on Japan to allow a faster pace of BoJ policy normalization as part of the joint intervention arrangement would an important step to help reverse yen weakness."

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

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD: Downward-sloping trendline near 1.3470 remains key barrier

The British pound faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar during the European trading session on Tuesday.

EUR/USD flatlines above 1.1500, awaits US jobs data

EUR/USD holds steady around 1.1505 in European trading hours on Tuesday. Markets remain cautious ahead of a slew of US jobs data, starting with the JOLTS Job Openings Survey later today. However, the downside appears capped by hot Eurozone inflation in July, bolstering the case for a European Central Bank rate hike at the next meeting.

Gold holds steady above $4,050; hawkish Fed bets favor bearish traders

Gold remains confined in a range below the $4,100 mark through the early European session as traders opt to wait for further developments surrounding the Middle East crisis. Meanwhile, the uncertainty over US-Iran peace talks continues to act as a tailwind for the safe-haven US Dollar.

Aave: Bearish RSI divergence risks a 20% drop despite steady DeFi deposits

Aave (AAVE) extends a mild near-term recovery on Tuesday, holding above its 50-day Exponential Moving Average at $90.80. Aave protocol’s V3 deployment on Monad blockchain recorded over $500 million in deposits over the last month, reflecting increased user adoption.

US JOLTs report in focus

In the US, the June JOLTs report will be in the spotlight. Job openings have increased modestly this year, which has historically predicted rising wage cost pressures ahead. June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.