Traders are turning less bearish on the dollar’s prospects versus the yen, according to Bloomberg's FX strategist Vassilis Karamanis, who notes that the gamma outlook is suggesting room for a rebound toward the 150 level.
USDJPY vol skew has shifted higher across tenors compared to a week ago, with spot at 147.32 — more than 3% higher since its June 13 low at 142.80. The move is pronounced at the belly of the curve as the front-end already priced out a significant yen rally earlier this month.
One-month risk reversals traded earlier at 122 bps, puts over calls, the least bullish sentiment on the yen since late March.
