Japanese Yen within touch of forty-year lows as intervention talk heats up

The Japanese Yen (JPY) remains under pressure against the US Dollar (USD), with the USD/JPY pair trading near multi-decade highs and closing in on the 2024 peak around 162.00. Societe Generale points to further upside for the pair if key support holds, while Deutsche Bank warns that official intervention chatter is growing louder as the pair levels come close to levels last seen in 1986.

Intervention chatter intensifies near 1986 lows

Deutsche Bank highlights that the Yen is within a whisker of its weakest level since 1986 and that thin holiday liquidity on Friday could give Japanese authorities a window to surprise the market.

That risk means any further Yen decline could prompt official pushback even if the broader trend still favors US Dollar strength.

There's a lot of chatter about intervention likely around these levels, so we'll see if the holiday provides an opportunity to surprise the market and get a bigger move due to the poor holiday liquidity.

USD/JPY momentum pointing toward 162.00

Societe Generale says the pair has resumed its uptrend after holding a multi-month ascending trendline and breaking out of consolidation, with the 2024 high near 162.00 now the first resistance.

A sustained break above last year's peak would open the door to measured-move targets beyond 164.00 and leave the Yen on the back foot, the bank says.

USD/JPY has staged a steady advance after testing a multi-month ascending trendline (now near 157.40). The pair has broken above the upper boundary of its recent consolidation, underscoring the prevalence of the upward momentum.

Will Japanese authorities intervene again?

Both banks agree that the Japanese Yen remains vulnerable, but they stress different near-term risks. Societe Generale's favors further USD/JPY upside as long as the 159.65-159.10 support zone holds, with targets clustered around 163.70-164.20 and 165.70. Deutsche Bank, meanwhile, flags the rising probability of official intervention near the 1986 lows, a wild card that could trigger sharp reversals in thin liquidity. 

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