USD/JPY longs unwind as yen strengthens, Nikkei 225 drops sharply
USD/JPY experienced significant selling pressure as long positions unwound, with the pair dropping 1.2% to 148.50 amid broad yen strength. The move coincided with a sharp decline in the Nikkei 225 index, which fell 2.5% as investors reduced risk exposure. Japanese institutional investors repatriated funds, adding to yen buying pressure. The unwinding of carry trades accelerated as volatility spiked, with traders closing profitable long USD/JPY positions built during the recent rally. Technical analysis shows USD/JPY breaking below the key 149.00 support level, with momentum indicators turning bearish. The 147.80 level (200-day moving average) now acts as immediate support. Market positioning data suggests further unwinding possible if risk-off sentiment persists, potentially pushing the pair toward 147.00 in the near term.
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