- The USD/JPY put demand or implied volatility premium has hit five-week lows, according to risk reversals.
- The market participants are likely expecting dollar rally to continue.
The USD/JPY one-month 25 delta risk reversal (JPY1MRR) hit five-week highs Friday, signaling that investors are likely positioning for further dollar rally.
As of writing, the risk reversals are being paid at 0.925 USD/JPY puts (bearish bets) compared to 1.5 USD/JPY puts on Oct. 26.
The drop in the implied volatility premium for put options from 1.5 to 0.925 validates the pair's bullish reversal from 111.38 to 114.00 witnessed in the last two weeks.
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.