Goldman Sachs indicates that Japan's largest foreign exchange intervention in 15 years has triggered a significant reduction in tactical yen carry trade positions, exceeding the initial unwinding seen after the intervention in July 2024. However, strategist Karen Reichgott Fishman notes in a report that as the macro backdrop provides less support for the yen compared to the summer of 2024, the dollar-yen pair has retraced half of its initial decline.

Despite a substantial reduction in speculative positions, "if conditions are right," more unwinding could still occur; "if macro and market conditions support yen strength," positions could even turn net long, as seen in July and August 2024. The market currently prices in about a 75% probability of a rate hike by the Bank of Japan in September, and a faster tightening pace could keep the yen "strong for a longer period without a change in the global economic growth environment."

To achieve more structural position unwinding, Japanese investors would need to repatriate unhedged overseas assets, but overseas returns remain attractive, and official portfolio flow data has yet to show such rotation. Without catalysts like faster BOJ rate hikes, capital repatriation, or other factors driving sustained yen strength, the impact of intervention could further diminish, ultimately posing a risk of the yen falling to new lows.