BUZZ-COMMENT-Yen bulls may soon get another opportunity

A strong U.S. inflation print on Wednesday would offer an opportunity to fade USD/JPY strength and allow market participants to join asset managers in their more optimistic view of the yen.

CFTC data shows asset managers have been increasing their net long positions in the Japanese currency of late, with overall yen longs at the highest level since March 2024. This coincides with an uptick in overall futures positioning.

By contrast, leveraged accounts remain net short the yen against the greenback, likely positioning against a more hawkish Fed should inflation stay elevated or tariffs be imposed.

Traders will use the U.S. CPI as well as two days of congressional testimony by Fed Chair Jerome Powell this week may to evaluate whether inflation remains an ongoing issue that needs to be addressed.

However, neither event is likely to change a stream of yen buying linked to Bank of Japan rate hike expectations or haven-related demand as a hedge against a stagflation scenario developing in the U.S.

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