The US Treasury bought yen and sold euros in a coordinated intervention with Japan confirmed around August 2-3, 2026, the first time in fifteen years Washington has propped up another currency. The move follows a multi-decade slide in the yen and comes as Japan sells US Treasuries, pushing up US yields and raising the odds of another carry-trade unwind.
Treasury Secretary Scott Bessent committed to purchasing between $5 billion and $10 billion worth of yen while simultaneously selling euros, in a coordinated US-Japan foreign exchange intervention confirmed around August 2-3, 2026. It is the first time in fifteen years that the US Treasury has actively bought another country's currency to prop it up.
Yen intervention reverses the 2011 playbook
The yen had been sliding for months, eventually hitting roughly 162.80 per dollar, a level that qualifies as multi-decade weakness. After the intervention, the yen firmed to approximately 157.80 per dollar.
Washington last joined a coordinated yen intervention in 2011, when it worked with G7 allies to weaken the yen after it surged following the Fukushima earthquake. This time the direction is reversed: the US is buying yen, not selling it. Preparatory talks reportedly began in January 2026, intensifying after Bessent visited Japan in May, and the US Treasury's July 24, 2026 currency report warned about excessive yen volatility ahead of the joint move during the Bank of Japan's policy meeting in late July.
Bond market pressure builds
Japan has been selling US Treasuries as part of its side of the intervention, adding upward pressure on US Treasury yields. The Bank of Japan raised its benchmark rate to 1% earlier in 2026, the highest level in 31 years, and analysts see a near-certain additional rate hike in September 2026. The July 2024 carry trade scare, when a modest Bank of Japan rate adjustment triggered a sharp global equity selloff, showed how tightly these bond market moves and currency flows are linked.
A mixed signal for the euro and risk assets
Bessent's strategy of selling euros while buying yen adds a further variable: if the dollar weakens against the yen but strengthens against the euro, it sends a mixed signal for dollar-denominated assets. When Treasury yields spike on foreign selling, the broader risk curve reprices, and Bitcoin and other digital assets have shown increasing correlation with liquidity conditions and real yield movements over the past two years.
The next catalyst is the Bank of Japan's September rate decision. If Japan hikes again, another wave of carry trade unwinds and further Treasury selling could follow.
Source: Crypto Briefing
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