JPY call bias weakest since May 18 after a bull breakout in USD/JPY

  • USD/JPY topped clocked six-month highs above 112.00 today, having scaled a key long-term falling trendline hurdle yesterday.
  • The JPY call (bearish bets) value dropped to levels last seen on May 18.

The USD/JPY pair crossed the three-year-long falling trendline with strength on Wednesday and rose to a six-month high of 112.38 in the Asian session today.

The bullish breakout is likely forcing investors to ditch long JPY call positions (bullish bets).  

For instance, the USD/JPY one-month 25 delta risk reversals are being paid at -0.675 JPY calls - the level last seen on May 18. About 2.5-weeks ago, the risk reversals were being paid at -1.55 JPY calls.

The rise from -1.55 to -0.675 indicates falling implied volatility premium (falling demand) for cheap out-of-the-money JPY calls.



Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.