FX Daily: Joint US-Japan Yen Intervention Serves as Containment Exercise

Daily Currencies Ratings — 03/08/2026 — Source: ING

USD: Markets Still Pricing In a Fed Hike

In theory, the dollar should be broadly weaker after US and Japanese authorities confirmed joint FX intervention, with Japan likely having sold $70–80 billion over the past three days. Washington's direct participation is itself notable: the US Treasury has historically been reluctant to join FX intervention, typically viewing currency levels as market-determined unless financial stability risks become acute. Lower oil prices — following reports that US President Donald Trump favors negotiation over military engagement with Iran — should also weigh on the dollar.

The dollar's resilience likely stems from unresolved questions about whether the Federal Reserve will raise rates in September. After briefly pricing in less than 10 basis points of tightening following Chair Kevin Warsh's press conference last week, market expectations have rebounded to 16–17 bp on the view that holding steady would trigger a further sell-off at the long end of the curve. US 30-year Treasury yields remain above 5.20%, and the 30-year mortgage rate has climbed to 6.75%.

The Fed appears unlikely to skip a September hike unless incoming US data is sufficiently weak. Key inputs arrive this week: JOLTS job openings, ADP employment, and Friday's non-farm payrolls report. NFP consensus stands around +75,000–80,000 — potentially not weak enough to rule out a hike. The case for a sustained dollar sell-off has yet to materialize.

Today's focus falls on the July ISM manufacturing release, expected to be reasonably strong. The DXY dollar index will continue reacting to the USD/JPY intervention narrative, but with diminishing marginal impact. Support near 99.35/40 could hold, and DXY may break back above 100 this week.

— Chris Turner, ING

EUR: Assessing EUR/JPY Intervention Signals

EUR/USD should be performing better, supported by solid eurozone hard data last week, lower oil prices, and substantial dollar selling from Japan. Its reluctance to gain may partially reflect reports that US authorities were checking rates in — and possibly selling — EUR/JPY on Friday. Checking rates is a standard precursor to intervention, in which a central bank contacts primary dealers to assess market conditions and signal readiness to act.

Any lasting impact on the euro appears doubtful. The US Treasury holds only approximately $13 billion in euro-denominated FX reserves ($1.2 billion in deposits, $11.7 billion in securities) — negligible compared to Tokyo's market activity and global FX flows. The Treasury may have sold EUR/JPY — effectively raising yen investments at the Exchange Stabilisation Fund at the euro's expense — to avoid explaining to the US public why it was selling dollars.

The more durable driver of EUR/USD will be the Fed's September decision. That question remains unresolved, and this week's data will be decisive in determining whether the pair tests 1.1615/20 resistance or trades back below 1.15.

— Chris Turner, ING

JPY: Intervention as a Containment Strategy

The headline development is Washington's participation in bilateral intervention alongside Tokyo. The Fed had checked rates — a precursor to intervention — back in January but appears to have acted on Friday. US Treasury Secretary Scott Bessent may have concluded that yen weakness was undermining Japanese Government Bonds (JGBs), which in turn pressured Treasuries.

Notably, Japan has indicated it will use the Fed's new FIMA repo facility, enabling it to raise dollars against Treasury holdings rather than selling Treasuries outright to fund intervention. The FIMA facility, originally established in March 2020 during the pandemic dollar-funding squeeze, was designed precisely to let foreign central banks access dollar liquidity without dumping US debt — avoiding a destabilising cascade in the Treasury market.

Regarding USD/JPY prospects, this intervention does not alter the fundamentals: a Fed near hiking and Tokyo maintaining accommodative monetary and fiscal policies that pressure the yen. Sustaining USD/JPY below 155 through bilateral action alone appears unlikely. However, the intervention serves as a containment exercise — deterring investors from pushing USD/JPY through 160 — buying Tokyo time to introduce more yen-supportive policies, potentially including incentives to invest in Japanese domestic assets.

— Chris Turner, ING

CEE: Improved Sentiment Supports Regional Currencies; Koruna May Lag

The new month begins with a fresh data calendar, led by Turkey today. July CPI inflation is expected at 1.7% month-on-month, bringing the annual rate down to 31.7% from 32.1%. On a seasonally adjusted basis — closely monitored by the central bank — July inflation is expected to move back above 2%, aligning with the two-year average.

On Wednesday, the Czech Republic releases July inflation, projected to rise from 1.5% to 1.7% year-on-year, driven by higher fuel prices following the expiration of reduced diesel excise taxes and fuel station margin caps. The Czech National Bank meets Thursday; rates are likely to remain at 3.75%, with attention on the new forecast and forward guidance, expected to be dovish relative to market pricing.

Hungary publishes July inflation on Friday, with a further decline expected from 1.7% to 1.2% — below both market expectations and National Bank of Hungary projections.

Middle East headlines continue setting the tone. The absence of further escalation points to a more constructive mood ahead, while new EUR/USD highs should support gains in CEE currencies. EUR/HUF touched local highs near 365 on Friday, driven by global risk-off sentiment and news of a temporary nuclear power plant closure in Hungary that could affect industrial production and energy imports. Given its sensitivity to global risk sentiment, the forint stands to benefit most in the region, followed by the Polish zloty. EUR/CZK, driven primarily by interest-rate differentials, may push above 24.250 on the CNB's expected dovish tone.

— Frantisek Taborsky, ING