MUFG discusses the scope of Japan's JPY intervention on Thursday.

"Yesterday we had the most explicit and strongest warning from the Vice Finance Minister for International Affairs, Atsushi Mimura, who gave a “final warning” over yen selling and the sudden and sharp drop in USD/JPY that followed was certainly indicative of intervention by the BoJ on behalf of the MoF. The five-big figure drop in USD/JPY is far too big a move on just rhetoric and the report from the Nikkei that intervention took place points strongly to intervention," MUFG notes.

"What this intervention does is provide some time for the BoJ to assess the uncertainties related to the conflict in the Middle East. There was an understandable reluctance to hike this week due to the lack of clarity and that reluctance coupled with the Fed being more hawkish opened up scope for a de-stabilising yen sell-off, possibly next week when Japan will be on vacation for Golden Week – Monday through Wednesday next week is a Japan holiday.

But with yen shorts not as extensive as in past intervention episodes there is a danger that this action does not have a lasting impact. An escalation in the conflict and/or a further rise in energy prices could see USD/JPY rebound quickly," MUFG adds.