Following the coordinated intervention at the end of July, the U.S. dollar/yen rate moved temporarily toward the ¥155 range as the yen strengthened before rebounding. An analysis suggests that, depending on whether intervention resumes, the yen could strengthen to around ¥152 and possibly toward ¥150.
The Japanese and U.S. governments carried out coordinated yen-buying intervention at the end of July, and the U.S. dollar/yen rate at one point moved toward the ¥155 range as the yen strengthened. It subsequently rebounded again, trading in the ¥157–¥159 range in the first half of August.
Matsuda Satoshi (松田 哲), a former FX dealer, said that unless coordinated intervention is carried out again, he expects the downside to remain in the ¥155 range, with resistance in the ¥164 range. He said the yen could strengthen from the ¥159 range to ¥152 if coordinated intervention resumes.
Matsuda also pointed out that investors should avoid taking FX positions on the assumption that coordinated intervention will or will not occur. He said the practical approach would be to analyze the situation after intervention and respond once the market has settled down.
Matsuda did not conclude that the yen's depreciation trend would come to a complete halt, explaining that factors based on Japan's fundamentals continue to exert downward pressure on the yen. He also expressed the view that the latest intervention is likely to have no more than the effect of slowing the pace of the yen's decline.