JP Morgan Warns of Sharp Yen Gains Below 155

JPMorgan strategists are warning of a potential sharp increase in yen value if dollar-yen breaks below 155, according to a report from Bloomberg.

The bank estimates that between ¥16 trillion and ¥17 trillion (approximately $103 billion) of bearish yen positioning remains outstanding in the market, posing a risk of self-reinforcing short covering.

This could theoretically push dollar-yen into a 142 to 146 range, a level significantly stronger than current prices suggest.

JPMorgan views recent expectations around both the Government Pension Investment Fund's asset reallocation and the pace of Bank of Japan rate hikes as somewhat overdone, with low probability of dollar-yen falling materially below its assumed 155 to 165 range for now.