[JPMorgan Warns: 155 Could Trigger Yen Short Covering, USD/JPY May Fall to 142-146] BlockBeats News, September 4 – As the yen's strong rebound approaches the 155 level, JPMorgan has warned that if USD/JPY falls below 155, approximately ¥16 trillion to ¥17 trillion (equivalent to about $102.6 billion) in outstanding yen short positions could be unwound, further driving yen appreciation. Theoretically, USD/JPY could drop to the 142-146 range. JPMorgan strategists, including Tase Junya, noted that recent price movements suggest that large-scale yen short positions may not have been fully cleared. Once USD/JPY breaks below 155, the risk of "selling breeding more selling" will increase, and the extent of yen appreciation could exceed market expectations. Earlier this week, USD/JPY briefly touched 160.39 before quickly retreating to around 155.30. The yen is on track to rise approximately 2.7% against the dollar this week, marking its best performance since July. The yen's strength has been driven by multiple factors, including heightened expectations for further rate hikes by the Bank of Japan, speculative short covering, and increased demand for currency hedging by domestic Japanese investors. The swap market has almost fully priced in a 25-basis-point rate hike by the Bank of Japan this month and sees about an 80% probability of another hike in December. However, JPMorgan believes that market expectations for adjustments by the Bank of Japan and the Government Pension Investment Fund (GPIF) may be overdone and does not consider a significant break below the 155-165 range for USD/JPY to be a high-probability event. Meanwhile, Japan's top foreign exchange official, Masato Kanda, expressed dissatisfaction with the current yen movements, stating that Japan is prepared to continue addressing forex market volatility. This has further heightened market attention on the risk of official intervention. On the dollar side, Bank of America currently favors shorting USD/JPY with a target of 149, while TD Securities maintains a moderately bearish outlook on the dollar for the remainder of the year. The market is now awaiting U.S. non-farm payroll data and next week's CPI data to gauge the Federal Reserve's future policy direction. [Original Link]