What has been the impact of Trump’s tariff war in the FX market?

What the desk is arguing

There is a prevailing view that Trump's tariff policies will further amplify the strength of safe haven currencies such as the Japanese yen. The rationale behind this assertion lies in the historical tendency of investors to flock to stable currencies during periods of heightened economic uncertainty and geopolitical strife.

Moreover, as economic data reflects the potential adverse impacts of the tariff imposition, market participants may reassess risk, leading to increased buy-in for safe haven currencies. This perspective aligns with the broader market sentiment that prioritizes security amid oscillating trade relations between the U.S. and its partners.

Where it sits in our coverage

In our current coverage, we have a consensus target of 1.075 with a firm spread of 1.04 to 1.12. This forecast aligns well with the anticipated strength of the yen as a safe haven, especially given the backdrop of ongoing trade disputes that continue to shape market dynamics.

Specific forecasts from leading firms reflect a split in sentiment toward the yen amidst the tariff war context. Notably, the following targets have been established:

• JPMorgan: 1.10 (Mar-26)
• Bank of America (BofA): 1.04 (Mar-26)
• Goldman Sachs: 1.12 (Mar-26)

How other firms see it

The prevailing sentiment among analysts varies, with some firms supporting the view of increasing yen strength while others express skepticism. For instance, Goldman Sachs aligns with the perspective that safe haven demand will persist amidst trade tensions, while BofA argues for a less optimistic outlook, suggesting that the yen may not maintain its recent gains.

• Goldman Sachs: Aligned with safe haven strength
• BofA: Contrary view on potential yen weaknesses
• Barclays: Neutral, suggesting cautious positions for traders