ING
2026 FX Outlook
LIVE10 November 2025USD bearish
Back to CurrenciesBullish
USD/JPY
Yield convergence finally arrives
ING Forecast Path
vs Prior ForecastCurrent target: 152Prior target: 153Revision: -0.7%
Cross-Firm Forecast Comparison
Key Drivers
BoJ rate path
Fed-BoJ rate differential
Japanese trade balance
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 normalization continues with rate hikes to 0.75% by mid-2026
2.Fed-BoJ yield gap narrowing reduces carry trade appeal
3.Japanese trade balance improving as energy import costs decline
4.MoF intervention threat remains credible above 160
5.Repatriation flows from Japanese investors as hedging costs drop
Risk Scenarios
Very bullish JPY145-148
US recession drives aggressive Fed cuts; BoJ hikes to 1%
Base case152-155
Gradual Fed-BoJ convergence, orderly yen strengthening
Bearish JPY160-165
Fed holds rates high, BoJ pauses normalization, carry resumes
Analysis Summary
JPY should strengthen as BoJ continues its normalization path and the Fed cuts rates, narrowing the yield differential. We expect USD/JPY to drift lower throughout 2026 as carry appeal fades and Japanese real yields improve.