Feb 26 (Reuters) - FX traders should beware that the market is positioned for a bigger USD/JPY fall in the days and weeks ahead. Where spot closes at the end of this week in relation to a broken Fibo is key for its direction.
The USD/JPY speculative short - derived from net contracts of International Monetary Market speculators - has grown to its largest level since September 2024. For the week ending February 18, the value of net USD/JPY speculators' positions rose to $4.98 billion short from $4.48 billion a week earlier.
USD/JPY downside strike option premiums have been driven to new 2025 highs, which highlights fears that there will be a bigger slump in spot. There is market talk of increased USD/JPY selling from models and systematic accounts.
The weekly technical bias remains on the downside, as 14-week momentum remains negative. A USD/JPY close on Friday under the 149.23 Fibo, a 50% retrace of the 148.65 to 158.88 (September to January) EBS rise, would increase the likelihood for a bigger drop.
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