Xin Lang Cai Jing·2025-12-23 15:26Group 1 - The current environment presents a "strong intervention backdrop," increasing the likelihood of the Japanese government successfully preventing yen depreciation compared to usual circumstances [1][3] - The rationale for intervention is clear: year-end market liquidity shortages provide an opportunity, and market participants are struggling to justify current price levels, indicating a higher chance of successful intervention [1][3] - Long-term interest rate differentials and volatility indicators suggest that the euro/yen and dollar/yen exchange rates should have peaked by the end of 2023; however, both pairs have continued to rise, with euro/yen reaching a record high near 184 and dollar/yen hovering around 162 [1][3] Group 2 - There has been a dramatic decoupling of dollar/yen and euro/yen exchange rates from interest rate differentials since spring, described as a disorderly state [2][4] - Intervention is expected to curb the upward momentum of dollar/yen and euro/yen, but the likelihood of a significant reversal in the yen's weakening trend is low due to generally weak Asian currencies and ongoing concerns about economic growth and an aging population [2][4] - A correction similar to the one seen in 2014 after the sharp rise in dollar/yen and euro/yen is still possible; in the long term, this could pull dollar/yen back to the 140 level and euro/yen down to the 160 level [2][4]