JPM FX Positioning Monitor: First evidence of yen short covering; USD/CNY downside demand ebbs

Research evidence excerpt

JPM FX Positioning Monitor: First evidence of yen short covering; USD/CNY downside demand ebbs

J P M O R G A N Global Markets Strategy

12 July 2026

JPM FX Positioning Monitor

First evidence of yen short covering; USD/CNY

downside demand ebbs

• First signs of yen short-covering. Following Japanese officials’ comments Global FX Strategy

AC about potential GPIF portfolio adjustments, we observed +2.5-sigma net USD/ Patrick R Locke

JPY put demand on Friday (Figure 1USD/JPYdownsideonFridaysawthelargestdemandsinceAug‘25). In the options space at least, that 1d USD/ (1-212) 834-4254

JPY downside figure screens as the largest such flow since August 2025, just patrick.r.locke@jpmchase.com

before the resumption of Fed easing in September. While we are skeptical that Kunj J Padh

this may ultimately reverse the structural JPY depreciation trend (see here), this (1-212) 834-5108

nevertheless represents the first signs of yen-short deleveraging, and more kunj.padh@jpmchase.com

J.P. Morgan Securities LLC

positioning adjustments could follow. Figure 2FreshUSD/JPYstrikesstilmostlyconcentratedinuper150s,butsomeevidentbelow156 shows a distribution of USD/

JPY put strikes transacted on Friday, which observed a median of 159.75 and

the lower 10th percentile at 156.0.

• There is still a considerable yen short-base in the market, though it’s not

stretched. We had recently estimated overall USD/JPY length as high as +1.5-

sigma when averaging across options and futures data, which has now fallen

to +1.1-sigma (yen shorts in futures were reduced in the week prior to the GPIF

news) (Figure 3USD/JPYlongsarenotstretchedandareofthehighs-butarestilmaterial). That still ranks in the shorter tier of global FX positioning