The tactical short USD/JPY spot trade from FX Top Trades 2025, initiated on 13 January, has reached its soft target of 147.00, Danske Bank's FX analysts Kristoffer Kjær Lomholt and Filip Andersson report. 

Little room for further downside in long-end US yields

"While we initially intended to keep the trade open and adjusted the soft target to 145.00, we have decided to close the position booking a 5.7% profit, including a negative carry of -0.57%." 

"While we still favour short USD/JPY on a strategic basis, the pair has remained steady in the 147-148 range despite declining US yields and risk-off sentiment - typically JPY-positive factors - suggesting that further tactical downside may be limited for now." 

"Additionally, in our view, there is little room for further downside in long-end US yields, and as such, we believe closing this trade is the prudent move."