Where the Yen Goes From Here

Monday, 3 Dec 2012 | 12:26 PM ET
Don Farrall | Photographer's Choice RF | Getty Images

Short positions in the yen have rocketed to a five-year high, thanks to investor worries about the potential for new stimulus moves in conjunction with the coming Japanese elections. Some even think the yen could fall to 85 or more against the dollar.

Should you pile on?

Hardly, says Keagan York, Head of FX Strategy of Compass Global Markets,

York says the investors who think the yen is headed to 85 are overly bearish. "We've still got a problem with where the global funds are going to park their money that's a safe environment, and the yen unfortunately is going to benefit from it."

Euro Resilient, but Outlook Still Bearish: Pro
Keagan York, Head of FX Strategy of Compass Global Markets, says the euro is currently holding firm as investors' appetite to short the currency is waning although the outlook for the currency looks bearish.

York thinks the yen could hit 81 or even 80 against the dollar in the next few months. If he is right, all those investors who are short the yen will be in for a nasty surprise.

"I think they're going to continue to see money coming in and that's going to keep things in check," he told CNBC.

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