BofA Global Research FX Sentiment Survey – July 2026
Bank of America Global Research released its July FX and Rates Sentiment Survey, indicating that investor sentiment toward the Japanese yen has deteriorated to its most bearish level in four years, the strongest since 2022. Respondents overwhelmingly identified risks stemming from the Bank of Japan’s monetary stance and Japan’s fiscal policy as the primary reasons for anticipating further yen weakness, outweighing considerations such as narrowing interest‑rate differentials or valuation arguments.
The survey noted that overall conviction among participants remains relatively low, but policy concerns dominate the narrative. While investor positioning has only recently shifted modestly bearish, many market participants remain cautious due to the possibility of official currency intervention by Japanese authorities. In contrast, speculative positioning reflects a more aggressive bearish stance.
CFTC data cited in the report reveal that leveraged funds are holding their largest net short yen positions since 2007, underscoring a pronounced market bet against the yen despite repeated warnings from officials. The survey suggests that the risk of intervention has likely prevented positioning from becoming even more bearish.
Comments from Finance Minister Katayama were highlighted, emphasizing that monetary policy should remain the responsibility of the Bank of Japan and noting suggestions that the Government Pension Investment Fund could increase allocations to domestic bonds. BofA interpreted these remarks as an indication that policymakers are becoming increasingly sensitive to pressure building in both the yen and the Japanese government bond market.
The bearish sentiment is further fueled by doubts over whether the Bank of Japan will tighten policy aggressively enough to narrow the wide interest‑rate gap with the United States. The broader BofA survey showed respondents now view the Bank of Japan as the central bank most likely to deliver additional rate hikes beyond current market expectations, although many still believe policy normalization will lag behind the pace needed to materially support the yen.
The Bank of Japan’s next policy meeting is scheduled for July 30‑31, where policymakers are widely expected to keep the benchmark rate at 1% while updating their quarterly economic and inflation forecasts.
Meanwhile, rising Ultra 10‑Year U.S. Treasury Note Futures and expectations that the Federal Reserve could maintain elevated rates have continued to underpin the dollar, adding further pressure on the yen even as intervention risks remain firmly on traders’ radar.