Japanese Yen Forecast: J.P. Morgan Says Retail Investors Are Still Betting on Intervention
The Japanese Yen remains under pressure against the US Dollar, but J.P. Morgan says Japan’s retail investors are increasingly positioning for another round of official currency intervention.
USD/JPY traded near 161.14 on Thursday after retreating from this week’s high above 162.80, the strongest level since the 1980s. Despite the pullback, the pair remains more than 3.8% higher this year.
Dollar to Yen (USD/JPY): 161.69874 (-0.41%)
Euro to Dollar (EUR/USD): 1.141485 (-0.16%)
Pound to Dollar (GBP/USD): 1.340549 (-0.05%)
J.P. Morgan: Retail Traders Expect Tokyo to Step In
J.P. Morgan says Japanese retail investors—often referred to as “Mrs Watanabe”—continue to position for intervention by the Ministry of Finance.
“Japanese retail investors are sticking with the intervention trade.”
The bank notes that retail traders remain short USD/JPY while simultaneously long Yen crosses, an unusual positioning that reflects expectations policymakers will act to curb further Yen weakness.
At the same time, institutional investors continue to move money overseas.
“Pension rebalancing from foreign equities to foreign bonds continues.”
J.P. Morgan estimates Japanese pension funds bought ¥1.5 trillion of foreign bonds in June while selling ¥1.3 trillion of foreign equities, suggesting overseas investment flows remain supportive of a weaker Yen.
Overseas Investment Continues to Weigh on the Yen
The bank also highlights that Japan’s Government Pension Investment Fund (GPIF) generated a 16.47% return in fiscal 2025, with profits of ¥41 trillion, but has shown little sign of increasing allocations to domestic government bonds.
“So far, an allocation increase in domestic bonds has not been observed.”
Likewise, Japanese life insurers have yet to begin the large-scale repatriation of overseas assets that many investors had expected following the Bank of Japan’s rate hikes.
Taken together, J.P. Morgan believes these structural capital outflows continue to outweigh hopes for official intervention, leaving the Yen fundamentally vulnerable even as retail investors keep betting on a stronger currency.
