The focus in determining the conditions for intervention to curb yen depreciation is on a shift by speculators from selling to buying, and the relationship between USD/JPY and its 120-day moving average. Based on current market movements, this article examines how the possibility of a “third intervention” should be viewed.
Past interventions to curb yen depreciation have focused on shifting speculative yen selling to yen buying as yen selling intensified, but the current analysis suggests that the backdrop this time is a desire to avoid a return to speculative yen selling. The aim of the intervention is said to be to change the trend of yen depreciation. Based on the experience of interventions since 2022, the same framework may be applied this time as well. At present, USD/JPY remains in a phase in which the recovery of the yen is still limited.
Regarding the relationship between speculative positioning and the 120-day MA, it is explained that when USD/JPY shifts toward a weaker US dollar and stronger yen below the 120-day MA, speculators change from selling yen to buying yen. The fact that speculators such as hedge funds regarded this level as an inflection point and shifted to buying yen is cited as a factor supporting the current situation. Even after USD/JPY fell below the 120-day MA following the coordinated intervention by Japan and the United States at the end of July, it has generally continued to trade below that level.