JPMorgan: Short Yen Positioning Likely to Stay in Place - FJElite

JPMorgan’s view is that short yen positioning is unlikely to unwind in a meaningful way, even if the BoJ hikes next week and the Ministry of Finance steps in to support the currency. Bearish yen bets were already near a two-year high in the latest CFTC data, and intervention risk would rise sharply if USD/JPY breaks above this year’s high near 160.72 and starts moving toward the July 2024 low at 161.95.

The key point is that a sharp yen rally still looks unlikely because this setup is very different from July 2024. Back then, both the BoJ hike and FX intervention came as surprises. This time, both are already largely priced in, which means even if authorities act, the impact is more likely to be limited and short-lived rather than triggering a large squeeze higher in the yen.