Leveraged speculators have piled into short positions on the yen at a pace that has pushed net shorts to approximately 146,000 contracts, according to CFTC positioning data. The gap between hedge fund shorts and asset manager longs is now the widest since 2007.
A currency in free fall
The yen recently slid past 162 against the US dollar in late June 2026. That’s the weakest the currency has traded since 1986.
The culprit is familiar: interest rate differentials. The US continues to offer meaningfully higher yields than Japan, making dollar-denominated assets far more attractive to global capital.
Goldman Sachs has adjusted its forecasts accordingly, projecting USD/JPY to hit 162 within three months, 163 in six months, and 165 over the next 12 months. The bank’s derivatives analysis suggests a high probability of reaching that 165 level by mid-2027.
