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Japanese yen short covering begins, dollar’s downward demand for yuan weakens (J.P. Morgan)

2026-07-14·ima-daily5min-0714-03-a82e987cbf
Street Signal | Japanese yen short covering begins, dollar’s downward demand for yuan weakens (J.P. Morgan)

JPMorgan Chase's foreign exchange position monitoring report shows that the market is showing initial signs of yen short covering, but the current size of yen short positions is still within a substantial range and has not yet been overstretched.

Meanwhile, downside demand for USD/CNY has cooled significantly, but the market has not yet turned to net long positions. Additionally, USD/COP (Colombian Peso) has seen significant downside option demand recently.

The report believes that there are signs of adjustment in positions in the overall foreign exchange market, but these changes have not yet reversed the long-term trend. This suggests that the yen may strengthen further in the short term, while the unilateral appreciation pressure on the renminbi has eased, and the market is waiting for new catalysts.

One-sentence conclusion: The foreign exchange market is undergoing position adjustments. Short covering of the yen and weakening pressure for yuan appreciation are trends worthy of attention in the short term, but the long-term trend has not yet been reversed. Positive/negative: Bullish for the Japanese yen, negative for the US dollar.

The current position adjustment of the yen and the renminbi is still in the early stages and has not yet fully priced in. There is still room for further adjustments in the future. Catalysts:

1) The Bank of Japan’s (BOJ) monetary policy meeting and official speeches will release further hawkish signals;

2) The release of inflation data such as the US CPI, which will affect the Fed’s interest rate cut expectations;

3) The central parity rate setting of the Bank of China (PBOC) and any new exchange rate policy signals.

Full text

Japanese yen short covering begins, dollar’s downward demand for yuan weakens (J.P. Morgan)

JPMorgan Chase's foreign exchange position monitoring report shows that the market is showing initial signs of yen short covering, but the current size of yen short positions is still within a substantial range and has not yet been overstretched.

JPMorgan Chase's foreign exchange position monitoring report shows that the market is showing initial signs of yen short covering, but the current size of yen short positions is still within a substantial range and has not yet been overstretched. Meanwhile, downside demand for USD/CNY has cooled significantly, but the market has not yet turned to net long positions. Additionally, USD/COP (Colombian Peso) has seen significant downside option demand recently. The report believes that there are signs of adjustment in positions in the overall foreign exchange market, but these changes have not yet reversed the long-term trend. This suggests that the yen may strengthen further in the short term, while the unilateral appreciation pressure on the renminbi has eased, and the market is waiting for new catalysts. One-sentence conclusion: The foreign exchange market is undergoing position adjustments. Short covering of the yen and weakening pressure for yuan appreciation are trends worthy of attention in the short term, but the long-term trend has not yet been reversed. Positive/negative: Bullish for the Japanese yen, negative for the US dollar. The current position adjustment of the yen and the renminbi is still in the early stages and has not yet fully priced in. There is still room for further adjustments in the future. Catalysts: 1) The Bank of Japan’s (BOJ) monetary policy meeting and official speeches will release further hawkish signals; 2) The release of inflation data such as the US CPI, which will affect the Fed’s interest rate cut expectations; 3) The central parity rate setting of the Bank of China (PBOC) and any new exchange rate policy signals.

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