The Japanese Yen falls below the 155 mark against the US dollar, and the Euro-Yen hits a 20-year high! When will the Japanese government intervene?

The wave of yen depreciation continues to push higher. As of November 13, EUR/JPY has risen to 179.52, hitting a new high since the euro was launched in 1999. During the same period, the USD/JPY exchange rate has also been strengthening, with the yen remaining under pressure against the dollar. Behind these data points reflects a significant divergence in the economic policies of Japan and the United States.

Policy signals released, intervention expectations rise

The changes come from two directions. On one hand, Japan’s new Prime Minister, Sanae Takashi, recently stated that the central bank should proceed cautiously with interest rate hikes, implying that the pace of monetary tightening will slow down. On the other hand, U.S. President Trump signed a temporary funding bill on the evening of the 12th, ending a 43-day federal government shutdown, which will further boost the dollar. The contrast between hawkish and dovish policies directly intensifies the pressure for yen depreciation.

Japanese Finance Minister Shōzō Katō immediately issued a warning on November 12, pointing out that the foreign exchange market has experienced “one-sided rapid fluctuations.” This statement is usually a prelude to official intervention. Looking back at history, Japan’s Ministry of Finance has directly intervened during significant yen declines in 2022 and 2024, with intervention levels around 155 and 161.7 against the USD.

Intervention threshold becomes focus, institutional opinions diverge

However, there are differing opinions among market institutions regarding when the government will actually step in. Bank of America believes that the USD/JPY needs to test the 158 level before prompting substantial policy responses from Japanese authorities. Goldman Sachs has a higher expectation, believing that intervention probability will significantly increase when the exchange rate reaches 161 to 162.

This divergence reflects two realities: first, the Japanese government has a clear understanding of the “window period” for intervention; second, although the current depreciation is record-breaking, it has not yet broken through what most institutions consider the “hard threshold.”

Key points for the future

The future direction of USD/JPY will mainly depend on two variables. First is the economic data released after the U.S. government restarts, which will directly influence dollar strength. Second is the economic stimulus plan announced by Sanae Takashi in late November, which could become a key factor in reversing the yen’s depreciation trend.

Latest forecasts from JPMorgan and Mizuho Securities show a target price of 156 for USD/JPY by the end of December 2025. This indicates that the yen may have further downside potential against the dollar, but the “red line” for policy intervention is getting closer.