Yen has room to drop further but intervention risks cap USD/JPY upside - Goldman Sachs - investingLive

What the desk is arguing

Goldman Sachs suggests that the yen (JPY) might still decline further, yet the likelihood of intervention from Japanese authorities could cap any significant gains in the USD/JPY currency pair. The dynamics of monetary policy and market sentiment are pivotal as traders brace for potential rhetoric from the Bank of Japan regarding its currency interventions.

Current market expectations reflected in our consensus forecast suggest a median target of 154.5 for March 2026, which is notably lower than Goldman Sachs's projection. This divergence indicates a complex interplay between market perception and central bank actions that could influence the dollar's trajectory against the yen.

Where it sits in our coverage

Our current spot for USD/JPY is 157.0000 with a consensus target of 154.5000, which is situated within the range of forecasts provided by different firms, specifically from a low of 150.0000 to a high of 157.0000. This consensus aligns closely with firm views, particularly highlighting the cautious optimism about further yen weakness but also factoring in the risks of intervention.

Notably, some specific firm targets for December 2026 include:

• JPMorgan: 164.0000
• Goldman Sachs: 148.0000
• Morgan Stanley: 140.0000

These projections reflect a broad spectrum of expectations, especially when compared to our consensus which indicates a more measured outlook.

How other firms see it

Views on the yen are notably mixed among major firms, with some aligning closely with Goldman's perspective while others take a more cautious stance. Key firms reflecting this split in sentiment include:

• Goldman Sachs with a bearish outlook on the yen while cautioning about intervention risks.
• JPMorgan, projecting an aggressive upside for the yen over the longer term with a high target of 164.0000 by December 2026.
• Morgan Stanley, on the contrary, holds the most bearish target at 140.0000, indicating a significant departure from Goldman’s views on the currency’s trajectory.