HSBC Research flags the scope for another wave of JPY intervention by Japan's MoF.

"According to CFTC data, as of 2 June, the market's short JPY positioning via futures and options has moved to a Z-score of -1.94, reminding us of stretched levels seen in mid-2024 just before the MoF intervened. We think the MoF may soon intervene again," HSBC notes.

Admittedly, unless the Bank of Japan implements hawkish rate hikes, and/or oil prices fall materially and the Fed resumes its rate cut cycle, we doubt intervention alone can shift the USD-JPY trajectory into a downtrend. Our base case (assuming two hikes by BoJ in June and December - which are nearly fully priced in by the OIS market; oil prices normalising at year-end/early 2027; and no rate changes by the Fed) is for USD-JPY to be trapped in a sideways range, capped by intervention but supported by negative real rates in Japan. We forecast USD-JPY at 155 for end-2026," HSBC adds.