Two weeks after the historic joint US‑Japanese intervention to stop the yen’s decline, market sentiment is clearly turning toward a new fight. The Japanese currency perked up when Scott Bessent launched the first bilateral action since 1998, pulling the dollar up from an eye‑watering ¥164 to around ¥156. That move, executed in euros, left traders wary of provoking a rebuke from the U.S. administration, yet the yen has not been immune to pressure.

Since the intervention, data from the Bank of New York shows that investors have been consistently selling yen, driving the exchange rate back toward the pre‑intervention level. The dollar has rebounded to ¥159, and the ingredients are in place for further appreciation. Much of this activity is tied to the carry trade, where cheap yen is borrowed to finance higher‑yielding U.S. Treasury bonds and tech stocks.

Masayuki Nakajima of Mizuho Bank notes that the carry trade’s scale is modest but still exerts pressure on the yen. He cites a rapid rise in yen transfers from Tokyo branches abroad and large speculative net negative bets, especially during London and U.S. trading hours.

Ultimately, the yen’s weakness hinges on high U.S. debt yields and the Bank of Japan’s cautious rate path. Intervention will only succeed if these underlying drivers shift, and market participants remain ready for a continued showdown.