The speculative USD/JPY long position has increased despite widespread talk that the outcome of the July 30-31 BOJ meeting will have hawkish tilt.
IMM data for the week ending July 24 showed a futures market long an equivalent cash USD/JPY position of $8.3 billion, up from $6.5 billion the previous week and the biggest position seen since mid-March.
USD/JPY's recent failure to register a daily close below the key 110.65 Fibo, a 50 percent retrace of 108.12 to 113.18 (EBS) rise, and the long tails left on the Thursday and Friday candlestick lines are signs the downside is being rejected.
Market speculation abounds that the BOJ may tweak guidance on yield curve control, implement technical changes to risky asset buying and strengthen its pledge on vigilance to risk nL4N1UM1NV.
The recent rise in JGB yields and steepening of the JGB curve may suggest the market is eyeing a hawkish tilt in policy this week nL1N1UQ011.
USD/JPY's increased long positions and last week's downside failure tell a different story.