UBS lifts USD/JPY forecast, yen seen stuck in 140–150 range amid political risks - investingLive
UBS has adjusted its USD/JPY forecast upwards, projecting the pair will remain within the 140 to 150 range due to persistent political risks influencing the Japanese yen. With the current trading spot at around 157, potential catalysts driving the yen's performance include domestic policy changes and international geopolitical developments.
What the desk is arguing
The desk believes that the recent forecast revision from UBS highlights a crucial sentiment shift regarding the yen's trajectory. Despite concerns around political instability, the yen may struggle to rebound significantly in the coming months, concurrently influenced by broader U.S. dollar strength.
This positions the USD/JPY higher than the broad consensus targets among major banks, suggesting that while UBS expects the yen to linger in a particular range, the actual trading levels may reflect greater volatility and stronger dollar dynamics than anticipated. The implicit counterfactual here suggests that UBS's view downplays the yen's potential recovery should geopolitical risk factors stabilize or the Bank of Japan alter its current monetary policy stance significantly.
Where it sits in our coverage
Our consensus target for USD/JPY sits at 147.5, with a firm spread indicating moderate bearish sentiment on the yen against the dollar. This diverges from UBS's stance, as they anticipate tighter range-bound movement for the yen amidst current political uncertainties, while we suggest that further downward pressure may persist.
Specific targets from influential banks include: - JPMorgan: Dec26 target at 164.0 - Goldman: Dec26 target at 148.0 - MorganStanley: Dec26 target at 140.0
How other firms see it
Market sentiment varies widely among major banks, with some aligning closely to UBS's forecast and others taking a more bearish view on the yen's medium-term prospects. - JPMorgan maintains a bullish long-term outlook with a target of 164.0, indicating potential weakness for the yen. - Goldman takes a slightly more conservative approach, targeting 148.0. - In contrast, MorganStanley suggests substantial downside potential, projecting a target of 140.0, potentially aligning with a broader bearish sentiment toward the yen.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01UBS's forecast adjustment signals a cautious outlook for the yen amid political risks.
- 02Current trading levels of USD/JPY suggest volatility, exceeding broad consensus targets.
- 03Market sentiment reflects a split view, with some banks remaining bullish on the dollar's strength.
Market implications
The upward revision by UBS could catalyze renewed interest in USD/JPY, particularly among traders betting on dollar strength. An inability of the yen to break out of the projected range might lead to reduced trading volumes and heightened speculation surrounding political developments in Japan.
Risks to this view
Key risks include unexpected changes in monetary policy from the Bank of Japan, shifts in geopolitical tensions that may affect currency stability, and potential U.S. economic indicators that could strengthen the dollar further than anticipated.
USD/JPY — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Rabobank | Bullish | 145.00 |
ING | Bullish | 152.00 |
MUFG | Bullish | 152.00 |
Sources & References
How we cover this story
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