FX Markets: Treasury Secretary Rejects Yen Intervention, USD/JPY Finds Footing

The Japanese Yen (JPY) faced renewed selling pressure on Thursday after U.S. Treasury SecretaryScott Bessent explicitly ruled out joint intervention to prop up the beleaguered currency, reaffirming Washington's commitment to a market-determined “Strong Dollar.”

“Absolutely Not”

In comments that reverberated through Tokyo trading desks, Bessent stated the U.S. would “absolutely not” intervene in foreign exchange markets to support the Yen. He argued that the U.S. trade deficit naturally supports the dollar over time and that the administration's focus is on “setting the right fundamentals.”

This creates a significant dilemma for the Bank of Japan (BOJ) and Japan's Ministry of Finance. Without U.S. cooperation, unilateral intervention by Japan is historically less effective and more expensive.

Market Reaction: USD/JPY

• Price Action: USD/JPY recovered the 153.00 handle following the comments. The pair had previously dipped on speculation that the U.S. might soften its stance given the geopolitical volatility.
• The Carry Trade: With the Fed holding rates and the U.S. economy showing resilience (reinforced by strong tech earnings), the yield differential remains heavily in favor of the Dollar.
• The Wildcard: The only factor currently preventing a breakout back toward 155.00 is the geopolitical risk premium. As a traditional safe haven, the Yen attracts bidirectional flows—sold against the Dollar due to rate differentials, but bought on crosses (like AUD/JPY) due to fears of a Middle East war.

Outlook

For Forex traders, the “Bessent Put” is gone. The market now knows the BOJ is alone. If US treasury yields spike further on inflation concerns or strong data, USD/JPY has a green light to rally, barring a direct kinetic escalation in Iran that triggers a massive flight to safety.