USD/JPY Surges as UBS Reveals Critical Equity Rebalancing Flows Through Month End - MEXC

What the desk is arguing

UBS's alert on critical equity rebalancing flows through month end is driving a sharp USD/JPY surge, with spot now at 157.00. The desk argues that these flow dynamics, combined with thin liquidity, are amplifying the move and could persist into the final trading days of May.

Supporting evidence comes from the broad-based dollar strength and the lack of BoJ intervention signals, which leaves the pair vulnerable to further upside. The desk implicitly rejects the view that these flows are merely transient, suggesting they reflect structural portfolio adjustments rather than tactical rebalancing.

Where it sits in our coverage

Our consensus median targets USD/JPY at 154.5 in Mar26 and 147.5 in Dec26, with a wide spread of 24 figures from JPMorgan's 164 to Morgan Stanley's 140. The current surge aligns with our view that near-term risks are skewed higher, though it diverges from the consensus bearish longer-term outlook.

Specific firm targets published in our coverage include: - JPMorgan: Mar26 157.00, Dec26 164.00 (most bullish) - Morgan Stanley: Mar26 150.00, Dec26 140.00 (most bearish) - Goldman Sachs: Mar26 155.00, Dec26 148.00 - Barclays: Mar26 155.00, Dec26 149.00

How other firms see it

JPMorgan is aligned with the current upside move, targeting 157 for Mar26 and 164 for Dec26, the most bullish among our surveyed banks. In contrast, Morgan Stanley stands firmly contrary, with a Dec26 target of 140, implying significant downside from current levels.

Other firms present a mixed view: - Goldman Sachs and Barclays are moderately bearish in the medium term, with Dec26 targets around 148-149. - MUFG and Deutsche Bank are also bearish long-term, targeting 146 and 143 respectively. - BofA and ING sit near consensus at 147 and 152 for Dec26.