Barclays
FX Outlook 2026: Navigating the Turn
LIVE28 November 2025USD bearish
Back to CurrenciesBullish
USD/JPY
BoJ normalization drives JPY strength
BARC Forecast Path
Cross-Firm Forecast Comparison
Key Drivers
BoJ rate path
Fed easing cycle
Real rate convergence
MoF intervention stance
Carry trade positioning
All Firm Targets (Dec '26)
JPMBearish164.00
INGBullish152.00
BARCBullish149.00
GSBullish148.00
BofABullish147.00
MUFGBullish146.00
DBStrongly Bullish143.00
MSBullish140.00
Key Issues for 2026
1.BoJ rate hikes gaining traction as inflation becomes self-sustaining
2.Fed easing reduces rate differential headwind
3.MoF intervention more effective when aligned with fundamentals
4.Real rate convergence supports structural JPY appreciation
5.Carry trade unwind risk if volatility spikes
Risk Scenarios
Sharp appreciation145-148
BoJ accelerates normalization; Fed cuts aggressively
Base case149-153
Gradual BoJ normalization; Fed delivers insurance cuts
Analysis Summary
JPY to appreciate as BoJ continues normalization path with additional rate hikes in 2026. Twin deficit concerns in the US and potential Fed easing create a favorable backdrop. Risk of sharp JPY appreciation if USD/JPY breaks below 150 support, triggering algorithmic buying.