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Yen Bearish Bets Surge to ¥-75.1K, Highest in Cycle
CFTC data shows yen net short positions jumped 21.7% to ¥-75.1K. The carry trade remains dominant, but extreme positioning raises squeeze risk ahead of BoJ and US data.
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CFTC Data: Net Short Yen Positions Expand 21.7%
Japan CFTC JPY NC Net Positions fell from ¥-61.7K to ¥-75.1K in the latest reporting week. That 21.7% increase in net short exposure marks the largest speculative bearish bet against the yen in the current cycle. The Commitments of Traders (COT) report captures positioning through Tuesday, and the data confirms that leveraged funds are adding to yen shorts rather than covering them.
The simple read is that traders are piling on yen weakness. The better market read goes through rate differentials and carry trade mechanics. Japan’s yield curve remains flat while US two-year yields stay above 4.5%. That gap keeps the yen carry trade profitable – sell yen, buy higher-yielding dollars. COT data shows institutional money is still leaning into that trade. The move from −61.7K to −75.1K is not a reversal signal. It is an extension of a trend that has built since mid-2024.
Why the Carry Trade Still Dominates
The Bank of Japan has not shifted its policy stance enough to close the yield gap. The US Federal Reserve, meanwhile, has pushed back against early rate cut expectations. The result is a persistent USD/JPY bid that encourages short-yen positioning. The current net short of ¥-75.1K is well above the 12-month average of ¥-52.3K. That concentration creates a risk flag. When speculative positioning becomes this one-sided, the market becomes vulnerable to a short squeeze if a catalyst appears.
A squeeze scenario would require a hawkish BoJ surprise, a sudden risk-off move, or US data that pushes the dollar lower. None of those are the base case today. The COT data reinforces the dominant USD/JPY uptrend. The pair has held above its 200-day moving average for all of January. A net short expansion of this size suggests the market sees no reason to reverse course until the BoJ’s January policy meeting or the US CPI print provide a new directional signal.