UBS raises USD/JPY forecast on elevated energy prices/ - Investing.com

What the desk is arguing

The desk agrees with UBS's call to raise the USD/JPY forecast, as rising energy prices are likely to prompt further depreciation of the yen. This aligns with our understanding that external inflationary pressures are substantially impacting the Bank of Japan's (BoJ) monetary policy stance, potentially extending low interest rates into the foreseeable future.

Moreover, the current consensus target across major firms indicates a broader expectation of USD/JPY trending higher, reinforcing UBS's position. The scenario where energy prices stabilize or decline could present a counterfactual risk to these forecasts but seems less likely given current geopolitical tensions affecting supply.

Where it sits in our coverage

The current consensus target for USD/JPY stands at 147.5 for December 2026, with an observed range from 150.0 to 157.0. This reflects a growing divergence among firms, with some predicting further yen depreciation in response to continued energy cost pressures.

Notably, the following firms have set aggressive targets for USD/JPY by December 2026: - JPMorgan: 164.0000 - Goldman: 148.0000 - Deutsche Bank: 143.0000

How other firms see it

While UBS is raising its forecast, several firms maintain a more cautious outlook on the yen. Morgan Stanley anticipates a target of 140.0000 by December 2026, clearly diverging from UBS's more bullish stance.

Additionally, firms such as Mitsubishi UFJ and Barclays align with a moderate outlook, projecting values closer to 146.0000 and 149.0000, respectively. This suggests that among analysts, there is a split in expectations, as some view the yen's decline as unsustainable in the long term.