Goldman Sachs: Yen Weakness Nears Danger Zone as USD/JPY Rally Raises Intervention Risks

The Japanese yen is once again under pressure, with USD/JPY surging nearly 5% in just a month — its fastest climb since early 2024. According to Goldman Sachs (NYSE:GS), this sharp rally has reignited concerns that Tokyo may soon step in to slow the currency’s slide.

Japan’s new Finance Minister has already issued verbal warnings, signaling discomfort with the yen’s rapid decline. Goldman Sachs noted that while no direct action has been taken yet, Japan’s Ministry of Finance still has enough reserves to repeat the large-scale interventions seen in 2022 and 2024.

The bank explained that such interventions usually work best when the U.S. Federal Reserve turns dovish, the Bank of Japan stays firm, or domestic data supports a stronger yen.

For now, Goldman Sachs believes the conditions for direct intervention haven’t fully emerged — the yen hasn’t fallen sharply enough or detached significantly from fundamentals. But if USD/JPY quickly rises toward 161–162, the situation could change fast.

The yen’s weakness, Goldman added, reflects growing fiscal risk concerns and shifting expectations around Bank of Japan policy, both key drivers of its recent decline.

By Md Golam Rabbani