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Currency speculators have turned net long on the Japanese yen for the first time since February, signaling a major shift in market sentiment. According to recent positioning data, traders have unwound large short positions following heavy intervention risks and changing interest rate expectations.
The shift comes as the yield differential between the United States and Japan is expected to narrow significantly. As expectations rise for Fed rate cuts alongside potential monetary tightening from the Bank of Japan, the aggressive carry trades that previously weighed on the yen are rapidly unravelling.
This dramatic positioning reversal highlights a structural change in the forex market outlook for the yen. Investors will watch whether this momentum continues, which could trigger further short-covering rallies and impact broader risk sentiment in global capital markets.
