Deutsche Bank
FX Blueprint 2026: The Great Rotation
LIVE12 December 2025USD bearish
Back to CurrenciesStrongly Bullish
USD/JPY
The most asymmetric trade in G10
DB Forecast Path
Cross-Firm Forecast Comparison
Key Drivers
REER mean reversion
BoJ rate path
Carry trade unwind
Risk sentiment
MoF intervention
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
1.40% undervalued on REER - most mispriced G10 currency
2.BoJ normalization to 1% creates substantial rate pull
3.Carry trade the most crowded in FX history
4.Any risk-off event triggers violent unwind
5.MoF intervention provides floor support
Risk Scenarios
Sharp rally135-140
Carry unwind cascade + BoJ aggressive normalization
Bullish base143-148
Gradual BoJ normalization, moderate carry reduction
Bearish162+
US rates surge, carry trade resilient, BoJ dovish pivot
Analysis Summary
JPY is our strongest conviction single-currency trade. 40% undervalued on REER, BoJ normalizing, carry trade vulnerable. USD/JPY 143 by year-end. A carry unwind could push it even lower. This is the most asymmetric trade in G10 FX.