It’s not every day that two central banks coordinate to prop up a sagging currency. That’s exactly what the Bank of Japan (BOJ) and the Federal Reserve did in an effort to boost the yen.

With the Japanese currency hovering around four-decade lows, the two central banks intervened in currency markets. The BOJ has done that in the past, but the involvement of the Fed was unusual to say the least. It was the first time since the 1998 that the Fed helped the BOJ support the yen, but amid the currency market commotion, the WisdomTree Japan Hedged Equity Fund (DXJ) notched an impressive weekly performance.

Given this is a currency hedged ETF, DXJ’s roughly 3% jump last week is impressive. It benefits when the dollar is strong against the Japanese currency. Therefore, DXJ is winning on the back of yen losses. Still, there are other factors to consider that augur well over the final five months of 2026.

DXJ in the Spotlight

DXJ has a lengthy history of outperforming the unhedged MSCI Japan Index. It could be a Japan ETF to watch over the near-term for multiple reasons. First, the fund is showing resilience even as the yen slightly (and temporarily) perked up. That’s something to consider. Japan is a strong ally of the U.S.; the White House is unlikely to let the yen get crushed.

The Trump Administration has incentive to help Japan support its currency.

“A weak yen tends to put pressure on other Asian currencies, and it could make it harder for China to continue to allow a slow appreciation of its currency,” according to the Council on Foreign Relations. “All these currencies are very weak, and that was more or less working against the Trump administration’s goals to reindustrialize the United States.”

For advisors and investors evaluating DXJ, the yen is obviously a consideration. However, it’s worth noting the currency’s gyrations may be overshadowing a robust economic picture in Japan. This picture is supportive of long-term engagement with the WisdomTree ETF.

“There is a bit too much negativity around Japan’s economy right now tied the yen’s weakness. Japan actually has a number of important strengths,” adds the Council on Foreign Relations. “Its current account shows a substantial GDP surplus, the government has a ton of external assets, the net debt of the government is trending down relative to its GDP, and the headline fiscal deficit is down to around 1 percent of GDP.”

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