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Mar 26 - 06:55 PM

ING: Bearish on USD/JPY, but Potential Near-Term Test of 152+ Intervention Threshold

By eFXdata  —  Mar 26 - 03:00 PM


ING maintains a bearish outlook on USD/JPY over the longer term, attributing its stance to the current financial environment that necessitates a decline in US rates for a JPY recovery. Despite verbal interventions in Japan and a temporary softening of the US dollar's momentum, ING anticipates that USD/JPY could, in the near term, reapproach the 152+ zone, which has previously triggered verbal intervention from Japanese authorities.

Key Points:

  • Bearish Long-Term View: ING's stance on USD/JPY is fundamentally bearish, rooted in the broader financial context that a JPY rebound is closely tied to potential decreases in US interest rates.
  • Short-Term Re-test of 152+: The current market dynamics, characterized by reduced FX volatility and the PBoC's efforts to stabilize the yuan, might lead USD/JPY to test the 152+ level in the near future, a threshold associated with previous verbal interventions by Japan.
  • Carry Trades and Funding Currency: The yen's status as a favored funding currency for carry trades, coupled with external stabilizing factors like the PBoC's yuan management, underlines the complex dynamics at play in the short term, despite the overarching bearish outlook.


While ING's long-term perspective on USD/JPY remains bearish, influenced by the anticipation of falling US rates, the bank acknowledges the possibility of a short-term movement towards the 152+ intervention threshold. This near-term scenario reflects the nuanced interplay of market volatility, carry trade dynamics, and policy interventions, which collectively could drive USD/JPY to retest levels that have historically prompted verbal interventions from Japanese officials.

ING Research/Market Commentary


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