MUFG Research discusses the scope for Japan's direct intervention to support the JPY.

"Finance Minister Katayama highlighted that she told G7 members at yesterday’s meetings that Japan is watching FX with a high sense of urgency. US Treasury Secretary Scott Bessent did not attend the meetings but Finance Minister Katayama stated that she had also discussed FX with him earlier in bilateral talks. It quickly follows on from comments yesterday in which she said that they “definitely need to calm markets” and agreed to stay in close contact with Scott Bessent," MUFG notes.

"The latest comments indicate a higher risk that Japan is moving closer to intervening directly to support the yen with USD/JPY still threatening to break above the 160.00-level. The yen has continued to underperform even as the US dollar has corrected sharply lower in recent weeks. The yen has been the second worst performing G10 currency since the US-Iran ceasefire was announced on 7th April," MUFG adds.