The Japanese yen is having a truly awful year, and the people with the biggest wallets on Wall Street are betting it gets worse. Leveraged funds have built up net short positions on the yen approaching 138,000 contracts, according to CFTC data, the most bearish positioning since 2007.
The numbers behind the yen’s slide
The yen has weakened to roughly 162 against the US dollar, a level it hasn’t touched since 1986. Japan’s benchmark interest rates sit around 0.5% to 0.75%, while US Treasuries offer approximately 4%. That gap of roughly 3.25% creates an almost irresistible setup for carry traders, who borrow in a low-rate currency and park the proceeds in higher-yielding assets.
Goldman Sachs has raised its USD/JPY forecast to 165, suggesting the bank sees more pain ahead for yen bulls. Options market data reflects similar conviction, with pricing suggesting a 72% likelihood of the pair reaching that level by mid-2027.
Japan’s intervention playbook looks exhausted
