This week, the Japanese yen exchange rate has been strengthening all the way. On Thursday, the exchange rate of the US dollar against the Japanese yen rose to below 153, reaching a high of over two months.

As of press time, the US dollar was at 152.37 against the Japanese yen, down 0.99%.

Some analysts believe that the driving factors for the yen's recent rise include hedge funds sharply cutting their short yen bets, the unwinding of global carry trades, and the suspected intervention of Japanese authorities in the market to support the yen.

Last week, the U.S. Commodity Futures Trading Commission (CFTC) data show that hedge funds cut 38,025 net short contracts on the yen, for the largest position reduction since March 2011.

The Bank of Japan will hold an interest rate meeting on July 31st. The market is widely believed that the Bank of Japan (BOJ) is likely to discuss whether to raise interest rates at the July meeting and announce plans to cut bond purchases by about half in the next few years, which would signal the BOJ's determination to phase out its massive monetary stimulus. As the date approaches, traders appear to be abandoning their short yen bets for the time being.

Also, the potential uncertainty is not desired by arbitrage traders, who favor stability and Japan's ultra-low interest rates and therefore borrow yen and then invest in higher-yielding currencies.

Yusuke Miyairi, a London-based foreign exchange strategist at Nomura Securities, said, "Two weeks ago, almost everyone was talking about the yen carry trade, but now it looks like people have completely forgotten about it and are closing out their positions."

Kit Juckes, chief foreign-exchange strategist at Societe Generale, said, "It clearly looks like positions are being liquidated ahead of a possible rate hike when the timing of intervention would have been better." He argued that the moves are huge and will push up volatility. As volatility rises, so does the cost of holding positions. Therefore, there is an incentive for shorts to unwind their positions.

The Japanese authorities have remained silent on the strengthening of the yen exchange rate and whether they have intervened. Japan's Finance Minister Shunichi Suzuki (Shunichi Suzuki) and Japan's chief currency diplomat Kanda real (Masato Kanda) in an interview were not comment.

DBS Bank macro strategist Wei Liang Chang said that speculative short positions remain heavy as the yen was boosted by the closing of arbitrage trades due to heightened risk aversion triggered by the sell-off in technology stocks. Contrasted with the Federal Reserve and the European Central Bank is about to cut interest rates, Japan next week may tighten monetary policy, the yen short jitters are also deepening. The possibility of further yen strength ahead of next week's Bank of Japan meeting should not be underestimated.