Bank of America Revises USD/JPY Forecast for End-2026 on Strengthening Yen Outlook - MEXC

What the desk is arguing

The desk frames this as a notable shift in sentiment towards the JPY, as Bank of America revises its forecast for USD/JPY to 147.00 by December 2026. This adjustment aligns with a broader narrative of yen strengthening as Japan’s economic conditions improve gradually, coupled with adjustments in monetary policy from the Bank of Japan.

Supporting evidence includes several recent revisions from other banks also reflecting a divided consensus on the yen's trajectory, with targets ranging significantly. For instance, Morgan Stanley anticipates a much weaker JPY, projecting 140.00 by December 2026, whereas JPMorgan holds a bullish position, forecasting a rise to 164.00 by the same time.

Where it sits in our coverage

Our current consensus target for USD/JPY sees 148.00 by December 2026, within a range from 143.00 to 164.00. Notably, Goldman and Morgan Stanley are more pessimistic with targets set at 148.00 and 140.00 respectively while JP Morgan's projection at 164.00 represents the higher end of the spectrum, suggesting significant divergence in outlooks.

This latest revision from BofA puts it firmly at the lower end of expectations, prompting a reassessment of market positioning.

How other firms see it

Aligned firms such as JP Morgan and Goldman continue to show bearish sentiments that contrast with BofA's bullish positioning for the yen. Meanwhile, Morgan Stanley projects a significant decline, indicating a divided market in terms of where USD/JPY will be by the end of 2026.

The implications of this discourse not only affect USD/JPY but also spill over into perceptions around other related pairs, including EUR/JPY and potential Bank of Japan policy decisions that might influence the broader G10 FX landscape.