After the JPY had depreciated to a 40-year low against the USD, the Bank of Japan has been pushing back against further weakness via interventions since last Thursday, partly in coordination with the US Federal Reserve. Since then, the JPY has appreciated noticeably.

 

In the following Viewpoint FX, we examine how sustainable this recovery is likely to be and whether the recent moves in foreign exchange markets could also generate spillover effects in equity markets.

Key takeaways:

  • After the JPY fell to a 40-year low in July, the Bank of Japan intervened in currency markets last Thursday (July 30) to curb further depreciation.
  • A repeat of the abrupt August 2024 carry-trade unwind appears unlikely as further BoJ tightening is largely priced in. Unless short-term interest rate differentials narrow sharply, market spillovers should remain contained, while strong earnings are supporting Japanese equities.
  • For now, the JPY could trade at around USD/JPY 155–160. The JPY’s future trajectory will now largely depend on how central banks respond to evolving economic and market conditions.

The PERSPECTIVES Viewpoint is currently available and client-ready for the following regions: Germany, Americas, Europe, Middle East, Africa and Asia Pacific.

PDF

Language:

CIO related articles

macro europe energy and economic resilience desktop

PERSPECTIVES Special

Macro Europe: Energy and economic resilience

This PERSPECTIVES Special explores how Europe's energy security, supply chains and policy response have evolved in recent years, separating cyclical factors from deeper structural changes.
beyond labels investment performance through a sustainability lens desktop

PERSPECTIVES Special

Beyond labels: Investment performance through a sustainability lens

This PERSPECTIVES Special analyses the performance of selected equity index methodologies and labelled bond segments across major regions over both the year-to-date and 12-month periods.
china special desktop

PERSPECTIVES Special

Investing in China: Selectivity in a two-speed economy

In this PERSPECTIVES Special, we examine key developments across China's economy and financial markets and what this means for investment across asset classes and sectors.
Earth at night, view of city lights showing human activity in Europe from space. EU and Mediterranean on world dark map on global satellite photo.

PERSPECTIVES Viewpoint Alternatives

Venture capital: Assessing the European market

In this Viewpoint Alternatives, we explore how Europe’s venture capital ecosystem is evolving, particularly as innovation and strategic investment themes gain momentum.
semiconductor stocks reset but ai demand holds

PERSPECTIVES Viewpoint Equity

Semiconductor stocks reset, but AI demand holds

In this Viewpoint Equity, we examine the recent correction in semiconductor stocks and the implications for investors.
Red Sea tanker

PERSPECTIVES Memo

Red Sea disruptions: increasing risks for energy markets

Houthi attacks in the Red Sea have increased risks to global oil supply and highlighted a key vulnerability in Saudi Arabia’s alternative export route. We explore the immediate market impact and implications for investors.
Global Chief Investment Officer Christian Nolting

PERSPECTIVES Video

CIO Video Update

Discover Global CIO Christian Nolting's outlook on markets, policy uncertainty, geopolitical tensions and Asia's growing role in shaping investment opportunities worldwide.
us deficits a new twist on wicksell desktop

PERSPECTIVES Special

US deficits: A new twist on Wicksell

This PERSPECTIVES Special – US deficits: A new twist on Wicksell looks at the fundamental reasons why the US can continue to attract capital and generate wealth while running current account and budget deficits.
em asia structural change desktop

PERSPECTIVES Special

Emerging structural themes across Asia

We focus on how EM Asia’s market leadership is broadening beyond the “Asia Tech” narrative, with the rally increasingly supported by three structural drivers.
perspectives special humanoids desktop

PERSPECTIVES Special

Humanoids

From spectacle to substance: humanoid robots are moving out of controlled demos and into real-world tasks – but scaling reliable, cost-effective performance remains the real test.
podcast hero

PERSPECTIVES Weekly Podcast

August 3 – Volatility amid strong fundamentals

Stock markets have had some stumbles recently, with selloffs in the technology sector followed by rapid recoveries, but the fundamentals of the AI rally have not changed, says Dr. Jacky Tang, the Private Bank’s CIO for emerging markets, in this week's episode.

Aug. 03, 2026

See more

In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S.

The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

This web page is not an offer to buy a security or enter into any transaction. The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consider the sales restrictions relating to the products or services in question for further information. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment.