Eurizon SLJ Capital CEO Stephen Jen has described the coordinated US-Japan effort to support the yen as "a watershed moment," saying it will prevent the currency from sliding back to its four-decade low against the dollar. "USD-JPY has likely peaked because neither the US nor Japan will back down or concede to the market," he and the firm's economist and portfolio manager Joana Freire wrote in a note Tuesday. "Resistance is futile."

The yen hit its lowest level since 1986 as the US-Japan interest rate differential widened, prompting speculators to ramp up short positions. Traders began reducing their bearish bets after the two governments jointly intervened, sparking a brief rebound in the yen. Data from the Commodity Futures Trading Commission on Friday showed leveraged funds slashed net short yen positions in futures and options markets by about half to 63,600 contracts as of August 4.

However, the yen has since weakened back to around 159.30 against the dollar, erasing half of the gains triggered by the intervention, though it remains below the near-164 level seen last month. Eurizon expects the yen to eventually strengthen to 125 per dollar, though it did not provide a timeline. "Market expectations have long been due for a recalibration," the analysts wrote. "We believe the most important takeaway from this joint intervention is that both the US and Japan are determined to push USD-JPY lower."