The United States executed an unexpected and historic currency intervention last week, selling euros to support the Japanese yen without first notifying the European Central Bank, according to people familiar with the matter. This move caught Europe off guard.

Some senior officials at the European Central Bank reportedly viewed the US decision to use euros instead of dollars as an unprecedented break from the long-established cooperation practices among Western monetary authorities. The operation was designed to help Japan bolster its currency, which had fallen to a 40-year low.

Tokyo had already entered the foreign exchange market the previous week, selling US dollars to buy yen. By choosing to sell euros rather than dollars to assist Japan, Washington has signaled its reluctance to see the intervention trigger a sell-off of US Treasuries, which could push up yields on American government bonds.

Treasury Secretary Scott Bessent and Japanese Finance Minister Katsunobu Kato earlier this week warned that they would not hesitate to take action against the yen again if necessary. Japan's Ministry of Finance has indicated that it will now utilize a Federal Reserve facility that allows central banks to obtain US dollars using government bonds as collateral, without the need to sell those bonds outright.