Leveraged funds increase short yen positions nearly fourfold since February, pressuring USD/JPY above 160.00 before the BoJ meeting.
Investors have piled into short yen positions, reaching their highest level since July 2024, as USD/JPY remains above 160.00 ahead of the Bank of Japan’s policy meeting. The latest IMM report shows leveraged funds increased short yen bets for the fifth straight week, nearly quadrupling since late February.
The yen’s weakness persists despite falling energy prices, which typically support the currency. Analysts warn that if the yen does not strengthen, Japan may intervene again, particularly if softer Fed expectations and lower energy costs create conditions for a rebound.
Markets have fully priced in a 25 bps BoJ rate hike, mirroring the July 2024 move that triggered yen-funded carry trade liquidations after the Fed cut rates in September.