🧭 Yen Weakness Pauses as Official Warnings Gain Traction
— Markets Shift Into a “Correction Phase” Amid Thin Christmas Liquidity —
■ Market Overview: Yen Weakness Brakes Applied, Corrective Tone Emerges
After moving almost unidirectionally, the yen-weakening trend has finally hit the brakes.
The immediate trigger was strong verbal intervention from Finance Minister Katayama, explicitly warning against excessive FX moves.
In early New York trading, the finance minister stated in an interview with overseas media that:
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Authorities will take firm action against excessive FX volatility
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Currency intervention remains a standing option
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Speculative moves will be addressed in line with U.S.–Japan agreements
The unusually strong wording quickly altered market psychology.
USD/JPY reversed its prior uptrend, with yen buying gaining the upper hand.
These remarks were reiterated in today’s Tokyo session, pushing USD/JPY down from the 157 area to below 156.
Rather than a sharp selloff, the move appears to reflect orderly unwinding of speculative yen-short positions.
■ Christmas-Week Conditions Amplify the Impact of Official Rhetoric
From the latter half of this week, Western markets enter full Christmas holiday mode:
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On the 25th, Tokyo will effectively be the only active major market
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Participation from Europe and the U.S. drops sharply
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Liquidity falls to one of the lowest levels of the year
In such an environment, even modest catalysts can move markets, and official comments carry disproportionate weight.
Against this backdrop, the timing of the finance minister’s remarks was particularly effective—
pressuring speculative accounts in thin liquidity.
Importantly, following last week’s BOJ meeting:
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A rate hike was delivered
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Yet yen weakness accelerated instead of reversing
This “perverse reaction” likely made it harder for authorities to tolerate one-way speculative yen selling.
■ Governor Ueda’s Speech Becomes the Next Inflection Point
The next major event to watch is BOJ Governor Ueda’s speech at Keidanren on the 25th.
At last week’s meeting and press conference:
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The BOJ did raise rates, but
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Offered no clear roadmap for additional hikes
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The message was widely perceived as dovish,
fueling further yen depreciation
Key questions for the upcoming speech:
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Will Ueda express concern over yen weakness?
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Will he align more closely with the government / MOF stance?
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Or will he maintain his usual deliberately ambiguous tone?
Given thin holiday liquidity, the market reaction could be outsized depending on the message.
■ London Session: Yen Strength / Dollar Weakness Continues
Yen buying persisted into the London session:
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USD/JPY:
Tokyo high 157.08 → London low 155.65
Rebounds capped around the 156 area -
EUR/USD:
Rose into the upper 1.17s on broad dollar softness -
EUR/JPY:
Fell into the low 183s as yen strengthened
A growing consensus is forming that:
“Recent yen weakness was more speculative than fundamental.”
This perception—now seemingly shared by authorities—is gradually being reflected in price action.
■ Key Levels and Watch Points Ahead
① USD/JPY: Battle Around the 155 Handle
→ A clean break lower could trigger short-term stop-losses
② Tone of Governor Ueda’s Speech
→ In thin Christmas liquidity, its impact could be larger than usual
③ Sustainability of Official Pressure Near 160
→ Rather than actual intervention, the test is
how long psychological pressure can be maintained
■ Summary
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Strong finance-minister comments have clearly slowed the yen-weakening trend
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Christmas-week illiquidity is accelerating speculative position adjustment
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This is not yet a full trend reversal, but
one-way yen selling has become distinctly more difficult
👉 For the remainder of the week, this is not a market to chase trends, but rather:
A market to gauge the balance of power between authorities and speculative flows.
Patience is warranted—
focus on the quality of price action and the consistency of official messaging, rather than forcing trades.
