Hedge funds position for yen to strengthen past 150 as options bets build

Macro hedge funds are increasingly predicting the yen will surpass JPY150 against the dollar by year-end, with some longer-term options positions targeting JPY140, according to Bloomberg. In recent weeks, options activity on the dollar-yen pair has strongly favored bearish bets. The most actively traded November put option, expiring with a JPY142.86 strike, was the most actively traded on Tuesday, according to CME Group data.

Put volumes across expiring contracts before the end of 2026 were more than three times those of call options, illustrating the strong investor appetite for positions that benefit from a stronger yen. As of Wednesday, the dollar-yen exchange rate stood at ¥153.47, down 0.3% by late morning in Hong Kong. Despite a stronger-than-anticipated US labor report, the yen has managed to strengthen, bolstering the bullish outlook among currency traders.

This resilience in the yen's value has been reinforced by hawkish remarks from Bank of Japan Governor Kazuo Ueda and board member Hajime Takata. The recent acceleration in this trend came after the yen broke below the psychologically significant JPY155 support level, which had previously served as a critical barrier, even after Japanese authorities intervened in the currency market earlier this year.

The possibility of further official intervention is adding another layer to the trade. On Tuesday, US Treasury Secretary Scott Bessent challenged investors to bet against efforts to strengthen the yen, indicating policymakers' keen interest in the currency's direction. Macro hedge funds have been at the forefront of this shift, with Nomura reporting a sharp increase in demand for options protecting against a weaker dollar, as short positions grew after the yen broke through JPY155.