Major financial institutions Eurizon and Société Générale are increasing long positions in the Japanese yen, betting on a reversal in USD/JPY and EUR/JPY after months of sustained depreciation. The moves come as market participants weigh the risk of central bank intervention against the yen’s continued weakness.
- Eurizon and Société Générale increased net long yen exposure by $1.8 billion in two weeks
- USD/JPY currently at 151.65, near multi-year lows with 152.00 as a key resistance level
- Options markets imply a 40% likelihood of central bank intervention within 30 days
- EUR/JPY stands at 166.30, reflecting broader weakness in the yen across major pairs
- Rising JPY/USD volatility (+22% over 10 days) signals heightened risk sentiment
- Intervention risks may trigger rapid reversals in carry trade strategies and equity flows
Eurizon and Société Générale have reportedly increased their net long exposure to the Japanese yen by over $1.8 billion in the past two weeks, with the bulk of the positioning concentrated in USD/JPY and EUR/JPY. The institutions are targeting a sustained move above the 152.00 level in USD/JPY—a key psychological and technical threshold—on expectations of a policy shift by the Bank of Japan and growing concerns over intervention risks. At current levels, USD/JPY trades at 151.65, while EUR/JPY stands at 166.30, both near multi-year lows. The strategic positioning reflects a growing divergence in market sentiment. While the yen’s prolonged decline has supported carry trades and bolstered gains in Japanese equities, the increasing risk of official intervention—particularly from the Bank of Japan and the U.S. Federal Reserve—has triggered caution. Historical precedents show that coordinated intervention can push USD/JPY down by more than 3% within days, potentially erasing gains in yen-denominated assets. The move is also influencing broader currency dynamics. JPY/USD volatility has risen by 22% over the past ten days, and options markets are pricing in a 40% probability of a central bank intervention within the next 30 days. This has led to increased interest in yen-hedged assets and a shift in positioning among global asset managers, with some reallocating from emerging market equities to Japanese and European fixed income. Market participants are now closely monitoring macroeconomic data from Japan and the U.S., including inflation prints and employment reports, as key triggers for policy changes. Any sign of accelerating inflation in Japan or a dovish pivot from the Fed could further fuel yen strength and intensify the impact of the current bets.