Goldman Sachs Research notes that the risk of a sudden unwind of JPY short positions looks less likely than in the July 2024 intervention eposide.

"USD/JPY has grinded up to fresh 40-year highs and tactical short JPY positioning stands near the stretched levels reached prior to the July 2024 intervention and subsequent carry unwind in early August. This, combined with the rising volatility around energy, policy, and Al that has so far had less of an impact on FX, has raised some concerns about a sharp drop in USD/JPY yet to come. We think the vulnerability in terms of positioning is similar and should keep investors wary, especially with higher likelihood of repatriation flows. But the risk of a sudden unwind looks a bit lower than it was back then," GS notes.

"Overall, we think the nearer-term pressures will continue to be JPY-negative. But a faster and more disorderly depreciation would likely further raise the risk of intervention and of possibly the most credible form that could also shift the longer-term trajectory," GS adds.