Coordinated US-Japan intervention has triggered a potential yen reversal, while rising long-term Treasury yields are reshaping the outlook for Japanese and US equities.
Key takeaways
- Joint US-Japan intervention has broken USD/JPY below its 200-day moving average, signalling a potential multi-week correction.
- Japan 225 is near major support, with a bullish MACD divergence suggesting its five-week corrective phase may be losing momentum.
- Rising long-term Treasury yields could support bank margins, reinforcing the Dow’s relative strength over technology-heavy indices.
The macro theme for August will be centred on two points: first, the latest US-Japan coordinated FX intervention to halt the rapid decline in the yen seen over the past four weeks. The JPY hit a 40-year low of 163.99 in the last week of July.
Secondly, the reemergence of a potential sustained rally of the longer tenure US Treasury (UST) yields, where the 30-year UST yield staged a bullish breakout above its former Oct 2023 major swing high and rose to almost a 20-year high of 5.27% as of 31 July 2026, ex-post July’s FOMC meeting, as Fed Chair Warsh’s press conference failed to convince the bond vigilantes that the Fed can rein in the current elevated inflation trend in the US.
Based on these two macro pointers, we will highlight three potential impacted instruments: USD/JPY, Japan 225 and US Wall Street 30.
Joint FX intervention with sheer determination
The USD/JPY flirted with its 40-year high of around 164.00 at the start of last week before plummeting by 5% from 29 July 2026 to hit an intraday low of 155.23 on Monday, 3 August 2026, at the time of writing.
Japan’s Ministry of Finance has issued an official statement confirming that both the US and Japan conducted their first joint FX intervention in 15 years on Friday, 31 July, with a firm rhetoric from US Treasury Secretary Scott Bessent’s comments in a social media post that stated the US won’t hesitate to conduct more yen joint intervention.1
Bloomberg also reported that Japan had likely intervened in the FX market and brought back JPY solely on Thursday, 30 July 2026 (ex-post FOMC), for an estimated 8.45 trillion yen, likely the largest-ever single-day intervention by Tokyo. 2
Therefore, the latest rare, coordinated US-Japan FX intervention has underscored an unprecedented determination to defend against further yen weakness, given the lack of clear direction from the Bank of Japan to hike rates over the medium-term horizon.
USD/JPY broke below the 200-day moving average
Fig. 1: USD/JPY medium-term trend as of 3 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The price action of USD/JPY has broken below the 200-day moving average for the first time since October 2025, and a bearish break below its former major ascending trendline from the 22 April 2025 low has occurred (see Fig. 1).
In addition, the daily MACD trend indicator has started to trend downwards below its centreline.
These observations suggest that the prior major uptrend in USD/JPY from April 2025 to July 2026 may have ended and is transitioning towards a potential multi-week correction sequence.
Watch the 159.45 key medium-term pivotal resistance, and a break below the 155.03 intermediate support (6 May 2026 low) exposes the medium-term support zone of 152.55/151.190.
However, a daily close above 159.45 invalidates the bearish tone, opening the door to a potential recovery towards the next medium-term resistances at 161.00/161.95 and 164.00/164.40.
Japan 225’s five-week correction may have ended
Fig. 2: Japan 225 medium-term trend as of 3 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The potential bullish reversal in the yen may attract global capital inflows back into the Japanese stock market, which in turn could trigger a positive feedback loop for the Nikkei 225.
The five-week correction of 18% seen in Japan 225 (a proxy for the Nikkei 225 futures) from its current all-time intraday high of 73,694, printed on 22 June 2026, has almost reached its key 200-day moving average and the major ascending trendline from the 7 April 2025 low (see Fig. 2).
The daily MACD Histogram has formed a bullish divergence, suggesting the correction phase is likely losing downside momentum at this juncture.
These observations suggest that the Japan 225 is at an inflexion point for a potential multi-week recovery.
Watch the 59,980/58,270 key medium-term pivotal support, and a clearance above 65,395 sees the medium-term resistances coming in at 67,515 and 69,425.
On the other hand, a failure to hold and a daily close below 58,270 invalidates the recovery scenario, exposing the next medium-term supports at 55,780/54,380 and 50,630.
The US Wall Street 30 bullish trend remains intact
Fig. 3: US Treasury yield curve (10-YR minus 2-YR) major trend as of 3 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
Fig. 4: US Wall Street 30 medium-term trend as of 3 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The Dow Jones Industrial Average (DJIA) ended July with a minor monthly gain of 0.3% and outperformed the tech-heavy Nasdaq 100, which recorded a monthly loss of 6.6%, dragged down by steep selloffs in US semiconductor stocks.
The Financials sector is the top sector in the DJIA, and, given the longer tenure, US Treasury yields have started to rally ex-post the FOMC, which in turn has created a plateauing of the US Treasury yield curve (10-year minus 2-year) at 0.28% (see Fig. 3).
A further potential rebound in the US Treasury yield curve is likely to improve banks’ earnings prospects via net interest margin expansion, in turn triggering a positive feedback loop for the Dow Jones Industrial Average.
The recent price action of the US Wall Street 30 (a proxy for the Dow Jones Industrial Average futures) has staged a rebound after a retest of the 50-day moving average on 30 July 2026 (see Fig. 4).
In addition, the daily RSI momentum indicator has rebounded from parallel support at 47, suggesting a possible revival of medium-term bullish momentum.
Watch the 49,900 key medium-term pivotal support, and a clearance above the 53,140 intermediate resistance may reinforce another potential bullish impulsive up move sequence towards the next medium-term resistances at 55,010/55,490 and 56,640/57,160 (Fibonacci extension clusters).
On the flip side, a breakdown and a daily close below 49,900 undermine the bullish tone, exposing the next medium-term supports at 48,345 and 46,970.
This article and its contents are intended for educational purposes only and should not be considered trading advice.
