Japan's legions of retail foreign-exchange traders, popularly known as Mrs Watanabe, are turning into sellers of yen.
They have shifted from playing the dollar's range against the yen to betting against the Japanese currency after it slumped to six-year lows recently, market participants and data show.
Portrayed as a fictitious housewife margin-trading on her laptop at the kitchen table, these retail investor have a large presence in yen trading and often take contrary positions. This time, they are trading on the market's momentum and positioning for further yen weakness as the Bank of Japan prints money.
For most of this year, Mrs Watanabe and like-minded Japanese retail players "had a prevailing psychology of buying the dollar around 101 yen and selling around 104 yen," said a dealer at a local bank. This strategy worked nicely while the dollar hewed a reliable 100-105 yen range since January.
The market - and Mrs Watanabe's behavior - changed at the beginning of this month, when the dollar tested, then broke decisively above 105 yen on the divergent prospects for Fed and BOJ policy.
The Mrs Watanabe retail traders became big players in currency trading in the past decade, seeking to beat the paltry returns from Japan's near-zero interest rates through such tactics as selling low-yielding currencies like the yen to fund the purchase of high-yielding assets like U.S. government debt.
Ditching the yen now pits them against large foreign hedge funds who have begun buying the currency just as the country's authorities and firms start to question the currency's slide.
If Mrs Watanabe keeps trying to chase the dollar higher against the yen, she could contribute to a market overshoot if the U.S. currency is making a near-term peak. She may also be at odds with the government, which is no longer cheer-leading a weaker yen, and with Japan Inc, which is starting to find the local currency weaker than it would like.