Eurazeo: US-Japan Joint Intervention Is a Turning Point, Yen Could Strengthen to 125
Nashnova编辑部
Eurizon SLJ Capital calls the first joint US-Japan yen purchase since 1998 a historic turning point, arguing the dollar-yen pair has very likely peaked with an eventual target of 125.
Why is this intervention "historic"?
The US and Japan jointly bought yen for the first time since 1998, breaking a trend of persistent yen weakness driven by high US interest rates.
This means → this is not a routine solo move by Tokyo — two economies acting in concert sends a far stronger signal than Japan intervening alone.
Post-intervention, the yen rebounded sharply from a near-40-year low of around 164, but has since drifted back to roughly 159.30, still below last month's high.
What is Eurizon's core call?
CEO Stephen Jen and economist Joana Freire wrote in a client note that dollar-yen has "very likely peaked."
Eurizon projects the yen will eventually strengthen to 125 per dollar, though no specific timeline was given.
In plain terms = moving from 159 to 125 implies the dollar still needs to fall another 20%-plus — that is an extremely large expected move.
Why is the US willing to help Japan prop up the yen?
Treasury Secretary Scott Bessent has publicly stated that the US remains willing to support Japan.
Wall Street speculation on the motive: without intervention, Japan might be forced to sell US Treasuries to raise dollars.
This means → the US is not acting out of charity — a large-scale Japanese Treasury sell-off would push US interest rates higher, which hurts the US itself.
How have hedge funds reacted? How much room is left to short the yen?
CFTC data through August 4 shows hedge funds have already trimmed their yen short bets following the intervention.
Eurizon's view: as long as the US and Japan hold their current stance, the room to short the yen will be materially compressed.
This reflects a deeper consequence — the yen carry trade (borrowing cheap yen to buy higher-yielding assets) faces sustained unwinding pressure, forcing capital back into yen.
Content is for reference only, not financial advice.