BOJ's Dovish Hike Deals Yen Bulls a Setback

The Japanese yen's bulls were dealt a setback by the Bank of Japan's slightly dovish hike, but the threat of further intervention could ultimately vindicate their bets.

Futures traders piled back into the yen ahead of the BOJ meeting, only to see USD/JPY push higher. Large speculators added bullish bets at their fastest weekly pace on record, increasing by 59k contracts, or 33.1%, from the week prior.

The record-high net longs in USD/JPY futures have triggered concerns of further intervention from Japanese authorities. With USD/JPY testing 158, traders may be prudent to remain on standby for further action.