Following coordinated intervention by Japan and the US and a Bank of Japan rate hike, hedge funds and others built up record yen short positions in the USD/JPY market in the first half of 2026. Reports indicate that after unwinding those positions following the intervention and rate hike, they have returned to yen short positions.
The yen depreciation trend was dominant in the first half of 2026, while speculators’ net short yen positions based on CFTC data reportedly reached a record 138,000 contracts. In monetary terms, this amounted to approximately ¥1.7 trillion, or approximately $105.7 billion, in long-dollar, short-yen positions.
In September, when coordinated Japanese-US foreign-exchange intervention and a Bank of Japan rate hike took place in succession, dollar/yen moved toward yen appreciation, reaching nearly ¥153. Although hedge funds and CTAs had shifted to approximately 20,000 contracts of net long yen as of 15 September, they reportedly began shifting back toward net short yen on 22 September.
CFTC position data reportedly showed that net short yen positions increased from 16,809 contracts on 29 September to 37,820 contracts on 13 October, indicating that positions were expanding despite the period of yen appreciation.
The reasons cited for speculators “rejecting” yen appreciation are reportedly the fading prospect of a narrowing Japan-US interest-rate differential, strong confidence in the US economy, and the continued view that yen appreciation is merely a temporary adjustment.