USD/JPY Nears 155 — Could a Short Squeeze Drive the Yen Even Higher?

The yen is making a sharp comeback, and JPMorgan warns that a break below 155 in USD/JPY could trigger a wave of short covering, potentially accelerating the yen’s gains.

JPMorgan estimates that around ¥16–17 trillion ($102.6 billion) in yen short positions remain open. If a large portion of these positions is forced to unwind, USD/JPY could theoretically fall toward 142–146, although this is a tail-risk scenario rather than the bank’s base case.

The move has already been dramatic. USD/JPY climbed as high as 160.39 earlier this week before reversing sharply to around 155.30, putting the pair close to the 155 level that JPMorgan sees as a potential trigger.

Expectations for a more hawkish Bank of Japan and possible changes to Japan’s pension fund allocation are adding to the yen’s momentum. At the same time, investors unwinding speculative yen shorts could amplify the move.

For USD/JPY traders, 155 is now the key level to watch. A sustained break below it could bring stronger yen gains and higher volatility, while a rebound above the level would ease immediate short-squeeze concerns.