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  • USD/JPY risk reversals are being paid at the highest level since May 18.
  • It indicates an  increased demand for JPY puts (USD/JPY calls).

The USD/JPY one-month 25 delta risk reversals (JPY1MRR) are being at 0.675 JPY puts – the highest level since May 18, indicating a falling demand for JPY call options (bullish bets).

The risk reversals were paid at 0.90 on July 11 and 1.55 on June 25.

The decline in the implied volatility premium for JPY calls from 1.55 to 0.675 indicates investors are venturing out of Yen bullish options, tracking the rise in the USD/JPY pair.

The currency pair hit a six-month high of 112.80 on Monday and cleared the three-year-long falling trendline hurdle, signaling a long-run bull breakout.