The data released by Japanese authorities on Monday failed to provide definitive proof that officials intervened in the foreign exchange market by buying yen for the first time since July 2024 last Friday. A relatively small discrepancy exists between the Bank of Japan's current account data released on Monday and the forecasts from money brokers last Friday, making it difficult for outsiders to determine whether authorities actually entered the market with a small-scale purchase of yen or did not intervene at all. Furthermore, the BOJ data indicated that it expects the current account to decrease by 630 billion yen on Tuesday due to fiscal factors. This projected decline is significantly larger than the average forecast of approximately 167 billion yen from Central Tanshi, Ueda Tanshi, and Tokyo Tanshi Research. The size of this discrepancy is far smaller than the smallest intervention amount since 2022, which was 729 billion yen (approximately $4.7 billion). Last Friday, the yen experienced its largest single-day gain in nearly six months. On Monday, the yen continued its upward trajectory. At the time of writing, the USD/JPY pair fell 1.28% to 153.73, marking its lowest level since last November. Reports indicate that the yen's sharp appreciation last Friday coincided with the New York Federal Reserve contacting financial institutions to inquire about the yen's exchange rate. Wall Street interpreted this as a sign that the Fed was preparing to assist Japanese officials in directly intervening in the currency market to support the yen. The market is now speculating that US and Japanese authorities might take the rare step of coordinated intervention to prevent further depreciation of the yen. Bank of America Securities noted that the New York Fed's inquiry regarding the USD/JPY rate last Friday shattered the market's conventional belief in the US's "non-intervention" stance. Previously, the market widely expected that following comments from US Treasury Secretary Besant on recent exchange rate movements, the US would merely tacitly approve intervention by Japan's Ministry of Finance if necessary. Bank of America Securities added that the US might aim to enhance its trade competitiveness by suppressing the dollar's exchange rate. Additionally, if Japan were to act alone (by intervening in the forex market), it might need to sell US Treasury bonds to raise funds. By supporting the yen, the US could help stabilize the Japanese government bond market, thereby reducing its spillover risks to the US Treasury market. Economists at Evercore ISI, led by Krishna Guha, stated, "US intervention is justifiable under the current circumstances, with the shared goal of preventing excessive yen weakness, while also hoping to indirectly aid in stabilizing the Japanese bond market. In any case, US participation in forex intervention is reasonable, and even without actual intervention from the US side, it could accelerate the unwinding of short yen positions." It is worth noting that the US has not participated in coordinated action to intervene in the yen's exchange rate since March 2011. However, Japanese Prime Minister Takaichi Sanae stated last Sunday that her government would take "necessary measures" to address speculative market volatility. Japan's top currency official, Atsushi Mimura, mentioned that the Japanese government would maintain close coordination with the US on foreign exchange issues and take appropriate action. Japanese Finance Minister Tsuyoshi Katanaya declined to comment on the exchange rate inquiries. The USD/JPY rate had previously approached the key level of 160, which was roughly the level at which Japanese authorities intervened four times in 2024. The Japanese government spent nearly $100 billion in 2024 buying yen to support the currency, with the exchange rate around 160 yen per dollar during each intervention, setting a rough benchmark for potential future action. Bank of America Securities indicated that for the Japanese government, the core demand is stability in both the exchange rate and the stock market. The Takaichi Sanae administration likely hopes to keep USD/JPY in the 145-155 range in the near term and see it retreat to the 135-145 range in the medium term, levels considered more aligned with fundamentals and interest rate differentials. However, with the general election approaching on February 8th, the Japanese government does not desire an excessive appreciation of the yen. Sharp fluctuations in the exchange rate could trigger a significant correction in the Japanese stock market, which would be unfavorable for the election. Simultaneously, an overly strong yen would make the central bank cautious when re-anchoring inflation expectations. Therefore, the US-Japan "rate check" might be more about buying time for the Takaichi Sanae government during the election window, keeping the exchange rate within politically acceptable bounds, rather than intending to push the yen to extremely high levels immediately. Looking ahead, Bank of America Securities expects that actions from the US side will suppress the USD/JPY rate below 160 in the short term, especially before Japan's February 8th election. However, if the pair retests recent highs, the risk of US-Japan joint intervention will rise significantly. Furthermore, although the Bank of Japan is expected to hike rates twice in 2026 and the Fed to cut rates twice, which would help support the yen, the uptrend for USD/JPY might resume later against the backdrop of strong US economic performance and Japan's structural capital outflows. Under these circumstances, as long as US inflation remains controlled, the possibility of future coordinated intervention will persist. For investors, this means that a simple one-way short yen strategy is no longer safe, and they must remain vigilant against potential policy resistance from both Washington and Tokyo.