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    TD Securities discusses evolving USDJPY dynamics due to US Treasury interventions for the Ministry of Finance.

    by VT Markets
    /
    Jan 27, 2026
    TD Securities’ FX Weekly Dispatch highlights changes in USDJPY driven by the US Treasury’s involvement in the foreign exchange market. The report expects USDJPY to trade between 152-155 ahead of the Lower House election on February 8. If the rate approaches 160, there may be interventions. The report also covers the risks tied to holding short positions on the yen in the current market.

    US Treasury’s Role in FX Dynamics

    The US Treasury’s support for Japan’s Ministry of Finance is reshaping the USDJPY landscape. Traders are advised to be cautious, as movements towards 160 could trigger interventions. This increases the risk for those shorting the yen. Market insights come from FXStreet’s journalists, who share observations and analyses from various experts, blending commercial notes and insights from both internal and external analysts. With the US Treasury actively backing Japan’s Ministry of Finance, USDJPY’s dynamics have changed. We expect the pair to stay within the 152-155 range as the February 8 election nears. If prices push towards 160 before the election, direct intervention is likely. For derivative traders, this creates a clear upper limit, making strategies like selling call spreads above 158 an appealing way to earn from falling volatility. Despite the pressure for a higher USDJPY—supported by last week’s US inflation data at 3.1% contrasted with Japan’s core CPI at 1.9%—political interventions could change the situation.

    Risks and Strategies for JPY Shorts

    Remaining short on the yen is becoming riskier. Recent CFTC data indicates that speculative net short positions in the yen are at heights not seen since Q3 2025, suggesting a crowded market. This positioning leaves traders more vulnerable to sharp declines if interventions occur. We recall the rapid falls following interventions in late 2025, where the currency dropped several yen in just hours. As a result, buying short-dated, out-of-the-money put options on USDJPY may be a cost-effective way to hedge remaining long positions. This strategy can help protect against the potential risks from upcoming official actions. Create your live VT Markets account and start trading now.

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