USD/JPY after the joint intervention: what are you watching?
Update, 18 September: the Bank of Japan has since raised its policy rate from 1.00% to 1.25% on a 7–2 vote (report).
Japan and the United States confirmed a rare joint intervention to support the yen, and the Bank of Japan's policy meeting on 17–18 September came with its rate at 1.00%, two days after the Federal Reserve's decision.
Questions to discuss:
- Does the intervention change how you trade rallies in USD/JPY?
- How did you approach the Fed on 16 September and the BoJ on 18 September in the same week?
- Are you trading yen crosses such as EUR/JPY or GBP/JPY instead of USD/JPY?
Background: currency intervention explained, our report on the joint intervention and the Bank of Japan report.
Background: When currency intervention works — and when it fails
Central banks sometimes buy or sell their own currency to move it — and the results range from decisive to futile. Here is what intervention is, when it succeeds, and the tell-tale signs to watch.
What is currency intervention?
A central bank or finance ministry buying or selling its own currency to move the exchange rate — buying to strengthen it, selling to weaken it. The goal is to change direction or cap extremes, not to set the rate permanently.
When does intervention succeed?
When it fights crowded, one-sided positioning, has the fundamentals' tailwind, and is credible — surprising, coordinated or at least verbally prepared. Alignment with policy multiplies the effect.
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An update after the Fed, and a note on how intervention risk changes position sizing.
The Fed raised its target range to 3.75%–4.00% on 16 September (report), widening the gap with the Bank of Japan, which then raised its own rate from 1.00% to 1.25% on 18 September (report). On its own, a wider gap tends to support USD/JPY. Against that sits the joint US-Japan intervention on 31 July (report), which showed both governments are willing to push back against yen weakness.
Intervention moves can be several hundred pips within an hour, often outside the main sessions, so a normal stop distance can be far too small. Some traders handle this by:
- sizing positions as if the stop could fill 200 or 300 pips away
- avoiding new long positions near levels where intervention happened before
- trading yen crosses at smaller size, since they react too
Background: currency intervention explained and the BoJ preview.
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