By Justin McQueen

May 1 (Reuters) - After months of verbal jawboning, Japan finally delivered on its intervention threats after USD/JPY was sold aggressively from 160 to 155.50.

What is notable is the tactical shift under Finance Minister Satsuki Katayama. The old playbook under Masato Kanda, Japan's former top currency diplomat, was widely read as velocity-driven – a 10-yen move in a month, or 4% in two weeks.

This episode breaks that mold. USD/JPY had been grinding 158-159 for weeks and the moment it popped above 160, USD/JPY was hit. The takeaway here suggests levels are the trigger now, not speed. 160 is likely to be the ceiling until further notice.

So where does USD/JPY go from here? Judging by prior intervention episodes, USD/JPY has room to fall much further. Recall in July 2024 when we saw an initial drop from 162 to 158, before tagging 150 in short order and ultimately falling to 140. Sure, the Bank of Japan was hiking, and U.S. non-farm payrolls were falling fast, so there were amplifiers.

But the setup here implies that near-term risk-reward leans against fading the move lower. Today’s price action also suggests that another round of activity from the Ministry of Finance may have occurred. Thus, if it is willing to defend 160 on the way up, this emphasises that 160 is the line in the sand.
USDJPY 10 minute chart


USDJPY intervention episodes


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))