The bearish army is approaching! The yen alarm has sounded as hedge funds are betting on the yen's decline with thunderous momentum! As of the week ending December 14, leveraged funds' net short positions in the yen soared to 85,000 contracts, the second-highest level since July 2024. This marks the second consecutive week of significant increases in yen short positions, after reaching a high of 92,000 contracts in the week of December 9. Since July this year, as the USD/JPY exchange rate has continued to strengthen, market sentiment has been increasingly bearish on the yen, with short positions accumulating steadily. The core reason currently weighing down the yen remains the interest rate differential of up to 3 percentage points between the US and Japan— even though the Bank of Japan has previously begun raising interest rates, the yen's support remains weak. To make matters worse, Japan's current inflation rate is still significantly higher than the policy interest rate, with real interest rates deep in negative territory. This means holding yen-denominated assets is effectively "losing money in disguise," prompting investors to vote with their feet by selling yen and shifting to higher-yield currencies. Does this scene look familiar? When the USD/JPY exchange rate surged past 160 last year, Japan's Ministry of Finance intervened in the forex market in July 2024 in an emergency move to defend the yen. Now, the yen is again pushed to the edge of a downward cliff— will a new round of currency defense battles begin? The market is holding its breath!