Hedge funds sharply reduced bearish bets against the Japanese yen after a rare coordinated intervention by U.S. and Japanese authorities altered the risk of staying short the currency. Leveraged funds cut net short positions in yen futures and options from nearly 138,000 contracts at the end of June to roughly 63,600 by August 4, before the figure fell further to around 59,526 in the following days. The 74,440-contract drop was one of the steepest reductions in yen short positioning since the 2008 financial crisis. Japan bought an estimated $75 billion to $85 billion worth of yen over two days in late July and early August, marking its biggest intervention since 2011. The move came with explicit support from Treasury Secretary Scott Bessent and signals that U.S. authorities were willing to use Federal Reserve facilities to help defend the currency, a level of coordination not seen in more than 15 years. The yen briefly strengthened to 155 per dollar after the intervention but later slipped back to around 159, nearing the 160 level that could test officials’ willingness to step in again if moves are judged disorderly. The renewed weakness underscores why the episode still matters for yen bears. Previous unilateral Japanese interventions often encouraged speculators to sell any rebound, and the latest reversal shows that official support can fade quickly when underlying pressures remain in place. Investors remain uneasy about Japan’s large debt burden, Prime Minister Sanae Takaichi’s push for aggressive government spending and a view that the Bank of Japan is raising interest rates too slowly. Those factors also continue to shape the appeal of the carry trade, in which investors borrow low-yielding yen to buy higher-yielding assets.