FX Alert: US-Japan 'Joint Intervention' Fears Rattle Markets as NY Fed Conducts Rare Rate Check

Currency markets are bracing for a potential paradigm shift following reports that the Federal Reserve Bank of New York conducted a “rate check” on the USD/JPY pair. This rare move, reportedly directed by the US Treasury, has sparked intense speculation that Washington and Tokyo are preparing a coordinated intervention, drawing comparisons to a modern-day “Plaza Accord”.

The Signal: More Than Just Observation

According to sources, the New York Fed reached out to major financial institutions to quote exchange rates during a period of low liquidity. Unlike unilateral interventions by Japans Ministry of Finance (MoF), direct US involvement signals a major policy pivot.

• USD/JPY Reaction: The pair plummeted approximately 1.75% on Friday following the news, closing near 155.80.
• Official Rhetoric: Japanese Prime Minister Sanae Takaichi warned of measures against speculative moves, while Forex chief Atsushi Mimura confirmed close contact with US counterparts.
• Market Implication: A joint intervention implies the US administration is now viewing the strong dollar as a liability.

Analyst View: Plaza Accord 2.0?

The involvement of the US Treasury elevates the risk profile for carry trades. Stephen Miller of GSFM noted that a “Plaza Accord 2.0”—referencing the 1985 agreement to depreciate the US dollar—cannot be ruled out.

If the US actively sells dollars against the yen, the floor for USD/JPY could drop significantly. However, skepticism remains.

Technicals & Forecasts

• Probability of Macro Agreement: Spectras Brent Donnelly assigns a 20% probability to a full-scale macro deal.
• Critical Zone: Traders are advised to monitor 159.00-160.00; a failure to intervene physically if prices rebound could damage credibility.