SocGen sees persistent yen weakness amid intervention doubts
Societe Generale argues that the Japanese yen's weakness will persist as neither rate trends nor growth prospects support a sustained recovery, despite intervention threats from the Ministry of Finance.
Societe Generale has reiterated its bearish outlook on the Japanese yen, stating that the currency's weakness is likely to persist despite the threat of intervention from Japan's Ministry of Finance. The French bank noted that Japan has struggled to shift the narrative on the yen since 2022, and current conditions favor further depreciation.
The firm argues that neither rate trends nor growth prospects point to a sustained yen recovery. While intervention may slow the pace of decline, it is unlikely to reverse sentiment materially. This view aligns with market participants who see USD/JPY testing the 160 level this week. For forex traders, the persistent yen weakness reinforces the appeal of carry trades funded in yen, as the interest rate differential between Japan and other major economies remains wide. The Bank of Japan's cautious normalization contrasts with hawkish stances from the Federal Reserve and European Central Bank, keeping pressure on the yen. Traders can monitor real-time USD/JPY quotes on NowPrice's FX page to gauge intervention risks and momentum.
Looking ahead, the key catalyst for a yen reversal would be a shift in BoJ policy or a sharp change in global risk sentiment. However, with no such signals imminent, the path of least resistance for USD/JPY remains higher. Traders should watch for verbal intervention from Japanese officials and any unexpected data that could alter rate expectations. The 160 level is a psychological barrier that may trigger official action, but SocGen's analysis suggests any pullback would be temporary.