Yen Bulls Flee as Commodity Longs Turn Cautious Ahead of Fed Rate Hike

The latest Commitment of Traders (COT) forex update showed that yen bulls piled in ahead of the Federal Reserve's rate hike, but this buying spree was short-lived as commodity longs turned cautious. The week ending September 15 saw a record two-week buying spree of 216k contracts in the Japanese yen, with speculators scrambling to rebuild bullish exposure.

Despite the Bank of Japan meeting, USD/JPY pushed higher following a slightly dovish hike, leaving speculative yen longs at record levels. With USD/JPY testing 158, the threat of further intervention could ultimately vindicate those bullish yen bets.

The EUR/USD pair remained under pressure this week as investors focused on recent interest rate decisions from the Federal Reserve and European Central Bank. The lack of major macroeconomic news from the US and Europe made for a relatively muted week, with no significant market-moving events expected.