BUZZ-COMMENT-Yen long positioning may soon become a headwind

Feb 18 (Reuters) - Positioning in the Japanese yen has become increasingly bullish in recent weeks as traders seek an alternative to the dollar. However, while the yen has seen a modest rebound, long positioning in the currency – which is a rarity – may soon become a headwind.

The narrative behind this latest yen buying is clear. The currency is a hedge against rising tariff uncertainty.

Meanwhile, the currency is backed by a comparatively more hawkish central bank than its major counterparts, which has also been helped by the robust domestic data.

That said, net long positioning in the yen is beginning to move into crowded territory.

As it stands, the 10-year z-score shows net longs are the highest since September at 1.7. Looking back, a figure around 1.6 has tended to coincide with a short-term top in the yen.

For now, while much of the factors behind the yen’s recent advance remain firmly in place, the positioning overhang suggests that further gains may be harder to come.

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