This builds on their previous note from last week here. Goldman Sachs is noting that the Japanese yen is likely to drop further in the near-term but sees limited upside in USD/JPY as intervention risks continue to rise.
For the time being at least, the firm argues that "the usual prerequisites for intervention are not yet met". So, that might allow for some room to roam to the upside for USD/JPY although more forceful verbal intervention is likely to put a ceiling on gains. For some context, they had previously pointed out that a rapid move towards 161-162 would be more of a trigger for Tokyo to take serious action. But in the meantime, they won't rule out verbal intervention as limiting the upside momentum as well.
Considering the circumstances, Goldman Sachs doesn't really prefer to stay short in the Japanese yen but instead prefers to be "long EM carry funded from low-yielders like CAD" amid potential downside risks to the US labour market as well.
