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Risk reversals on USD/JPY, a gauge of calls to puts, jumped to the highest level since July 2018 on Wednesday indicating investors are adding bets to position for strength in the US dollar against the Japanese yen. 

Three-month risk reversals rose to -1.05, the highest since July 18, 2018, having bottomed out at -2.25 at the end of December. A week ago, the gauge was seen at -1.5.

The uptick represents a rise in demand for call options (bullish bets) and validates Wednesday’s big move higher from 109.84 to 111.59. 

Three-month risk reversals