Coordinated US-Japan intervention from late July pushed USD/JPY above the ¥160 defense line, and it rose to around ¥164 in the first week of August. The government and the Bank of Japan are believed to have conducted intervention, while the rebound after the intervention was slow. The background, including euro funding, drew attention.
Japan and the United States conducted coordinated intervention to support the yen through yen buying from late July, sending USD/JPY above ¥160. While some had viewed the ¥160 level as the defense line during the previous intervention, views emerged that intervention would continue this time even after that level had been breached.
Through the first week of August, USD/JPY plunged from around ¥164 to the low ¥155s, and the government and the Bank of Japan are believed to have conducted yen-buying intervention on a scale of ¥12-13 trillion. The governments of Japan and the United States officially announced that intervention had been conducted, highlighting their coordinated relationship.
One point that drew attention was the suggestion that the intervention funds had been raised in euros rather than dollars, with EUR/JPY rising to historically weak yen levels. Intervention through the euro was reportedly intended to support the yen while moderating the impact of a strong dollar.
The focus going forward will be EUR/JPY movements and the impact of the European Central Bank's monetary policy. Although expectations for ECB rate hikes have weakened, rising energy and food prices caused by heatwaves and drought could have an impact, making cross-yen movements a key market focus.