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USD/JPY: value of bearish bets has dropped sharply in the last three days

The USD/JPY one-month 25 delta risk reversals (JPY1MRR) are currently trading at -1.60 in favor of the put options (bearish bets). Notably, the gauge stood at -2.27 on Jan. 1.

The uptick from -2.27 to -1.60 represents a drop in the implied volatility premium or demand for put options.

Moreover, the data indicates that investors are no longer buying bets to protect against a rise in the Japanese currency (fall in USD/JPY).

That validates the oversold conditions reported by USD/JPY's 14-day relative strength index (RSI) and the pair's ongoing recovery rally.

JPY1MRR

             

 

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