Hideki Shibata, a senior interest rate and foreign exchange strategist at Tokai Tokyo Intelligence Laboratory, wrote in a report that, as numerous orders to buy the U.S. dollar and sell the Japanese yen are linked to options around the 162 level, it is prudent to prepare for the USD/JPY pair to surge rapidly toward 170.
Should the 162 level be breached, the risk of subsequent rapid and volatile exchange rate movements would increase significantly.
Real interest rates are highly likely to remain in negative territory, making it difficult for a sustained yen appreciation trend to materialize.
Even amid risk-off sentiment triggered by the U.S. seizure of a Venezuelan presidential aircraft, the yen continues to weaken; this is partly because the net positioning for the yen in the IMM currency futures market is essentially neutral.
Judging from the deployment of speculative positions, a scenario like the one in 2024—where yen appreciation was driven by the unwinding of short positions—is unlikely to repeat itself.
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