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

What the desk is arguing

UBS argues that elevated energy prices will sustain USD/JPY strength by widening Japan's trade deficit and postponing the Bank of Japan's normalization timeline, per the full note source. The desk frames this as a structural shift in the balance of payments rather than a cyclical adjustment, implying a higher equilibrium range for the pair.

The support for this thesis comes from the persistent rise in global energy costs, which UBS expects to keep Japanese import bills elevated through 2026. This dynamic undercuts the consensus view that BoJ rate hikes will drag USD/JPY lower, as the bank implicitly rejects the alternative read that energy prices will moderate sharply.

Where it sits in our coverage

Our consensus median for Dec26 is 148.00, but the range spans from 140.00 (Morgan Stanley) to 164.00 (JPMorgan), a 24-figure spread. UBS's Dec26 target of 150.00 sits near the median but below the upper bound, reflecting a moderately bullish USD/JPY view relative to the median.

Firms aligned with a higher bias include jpmorgan (164.00), citi (152.00), and socgen (150.00). Contrary firms include goldman (148.00), morganstanley (140.00), and mufg (146.00), which are more bullish on JPY. UBS's call sits closer to the upper end of the consensus cluster, diverging from firms like Goldman and BofA that see a stronger yen.

How other firms see it

Aligned firms such as jpmorgan, citi, and socgen share UBS's skepticism on aggressive BoJ tightening, with targets ranging from 150 to 164 for Dec26. Contrary firms like morganstanley, goldman, and mufg anticipate a more hawkish BoJ and lower energy prices, driving USD/JPY to 140–148.

Related pairs to watch include EUR/JPY, which may also benefit from energy-driven USD strength, and the JPY crosses in general as oil prices dictate terms. The BoJ rate path remains the key intersection with this thesis, as any hawkish pivot would challenge UBS's call.