Goldman Sachs
- We have said that the probability of intervention should increase significantly once USD/JPY enters the 127-130 range, and we continue to hold that view.
- The real JPY TWI has also already fallen nearly 8% since March 3 and about 18% since the end of 2020, adding to the case for rising risk of intervention.
- As long as the Boj resists any tweaks to the YCC thresholds and verbal pushback from Japanese officials remains the primary form of intervention, near-term USD/JPY topside could have a bit more room to run
- At the same time, we continue to think that the currency's deep undervaluation, on top of the asymmetry created by possible intervention, mean Yen longs could be appropriate for long-horizon investors or market participants using FX structures for tail risk hedging
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Multi decade highs for USD/JPY:
