Mrs. Watanabe refers to the common Japanese housewife. It is believed that the total number of households in Japan as a collective would be a very large investor in the market and the actions would be able to affect the Forex market.
Watanabe is a common Japanese surname. And so the term "Mrs. Watanabe" is used to describe all the households in Japan and the typical Japanese retail investor. The term was popularized in the late 80s. And possibly originated from the name of one of the characters in the 1986 movie "Gung Ho".
Mrs. Watanabe, the Japanese housewife, seeks to manage family finances and increase the return of investments. Traditionally very risk averse and conservative. But in the low low interest rate environment in Japan of the 1990s and 2000s she seeks to invest abroad. And thus she becomes a carry trader, moving out of Japanese Yen and into higher yielding assets abroad.