USD/JPY faces downside as options traders keep long-term bullish yen bets

Options market positioning as of September 11, 2026 shows traders maintaining a constructive long-term view on the Japanese yen despite short-term choppiness in USD/JPY spot. Longer-dated risk reversals continue to reflect demand for yen calls, indicating hedging funds and real money accounts expect the yen to appreciate over a multi-month horizon, which implies downside pressure on USD/JPY, EUR/JPY and other yen crosses. The divergence between stable spot and bullish long-dated structures suggests investors are positioning for eventual Bank of Japan policy normalisation alongside an anticipated Federal Reserve easing cycle that would narrow the US-Japan yield gap. Near term, however, carry demand and firm US yields continue to cap yen strength, leaving spot vulnerable to squeezes higher. Traders should monitor implied volatility in three- to six-month tenors as a gauge of conviction, along with BoJ communications and US inflation data. A decisive break below recent USD/JPY support would validate the options-implied view and accelerate unwinding of yen-funded carry positions.