Bank of America recommends closing USD/JPY longs as pair approaches 160 - Investing.com
Bank of America’s recent recommendation to close USD/JPY longs as the pair nears the critical 160 level underscores a cautious outlook amid potential consolidation. The current spot rate at 157 suggests limited upside is anticipated given consensus forecasts trending lower over the next year.
What the desk is arguing
Bank of America (BoFA) is advising traders to abandon their long positions on USD/JPY as the currency pair approaches the psychologically significant 160 level. This recommendation is informed by the expectation of downward pressure, supported by structural elements in the Japanese economy and a global shift in interest rate dynamics.
With USD/JPY currently trading around 157, the firm’s forecast trajectory remains below the current spot and indicates a potential retreat in the currency pair over the near term. As such, the desk communicates a view that anticipates sustained tightening from Japanese authorities could continue exerting influence over the pair’s performance in the coming months.
Where it sits in our coverage
Our current consensus target for USD/JPY is 154.5000 for March 2026, reflecting a range between 150.0000 and 157.0000. This view aligns with the perspectives of several firms yet diverges from BoFA’s lower target for March 2026 at 154.0000 and a sequential decline to 147.0000 by December 2026.
Notably, other firms have varied outlooks with their December 2026 targets: - JPMorgan: 164.0000 - Barclays: 149.0000 - Deutsche Bank: 143.0000
How other firms see it
Some analysts remain optimistic about USD/JPY, with firms like JPMorgan projecting a rise to 164.0000 by December 2026, suggesting they are not as cautious as BoFA. Meanwhile, Goldman Sachs and ING are more aligned with consensus targets, aiming for more moderate levels of 148.0000 and 152.0000 respectively.
- Goldman Sachs: 148.0000 (Dec-26)
- ING: 152.0000 (Dec-26)
- Morgan Stanley: 140.0000 (Dec-26)
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Bank of America advises to close USD/JPY longs nearing 160, influenced by structural economic pressures.
- 02Current spot at 157 contrasts with BoFA's forecasts indicating further declines to 147 by December 2026.
- 03Diverging views among firms highlight different expectations for USD/JPY trends.
Market implications
The recommendation from BoFA to close long positions suggests a shift in sentiment among institutional traders which may influence market pricing in the short term. A potential drop below 157 could lead to increased volatility as traders reassess their positions amidst evolving rate expectations.
Risks to this view
Investors should consider potential upside risks if economic data surprises positively for the US or if Japanese monetary policy exhibits unexpected easing. Additionally, geopolitical developments could also play a significant role in the USD/JPY trajectory.
USD/JPY — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 159.60 |
Bank of America | Bullish | 149.00 |
Rabobank | Bullish | 145.00 |
All 22 desk targets for USD/JPY
Sources & References
How we cover this story
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Cross-firm research
USD/JPY Consensus Check: Spot at 158.17, Dec-26 Target 154.0 — Week of October 9, 2026
USD/JPY trades 2.71% above the 24-firm Dec-26 consensus of 154.0, with a 25.5-point dispersion range signalling deep disagreement on the BoJ-Fed spread path.
USD/JPY at 158.32: Consensus Targets 154.0, Dispersion Hits 25.5 Figures
Spot USD/JPY trades 2.81% above the 24-firm Dec-26 consensus of 154.0, with a 25.5-figure dispersion exposing deep disagreement on the BoJ rate path.
USD/JPY Consensus Check: Spot at 158.09, Median Target 154.0 — Week of October 7, 2026
USD/JPY trades 2.65% above the 24-firm Dec-26 median of 154.0, with a 25.5-point dispersion range signalling deep disagreement on the BoJ-Fed spread path.