MUFG
2026 FX Outlook: Post-Peak USD World
LIVE19 December 2025USD bearish
Back to CurrenciesBullish
USD/JPY
Mean reversion finally arrives
MUFG Forecast Path
vs Prior ForecastCurrent target: 146Prior target: 148Revision: -1.4%
Cross-Firm Forecast Comparison
Key Drivers
BoJ rate path
Fed-BoJ rate differential
Institutional repatriation
MoF intervention
Fiscal policy
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 to 0.50-0.75% narrows rate differentials significantly
2.Japanese institutional repatriation as domestic yields become attractive
3.Carry unwind risk as USD/JPY rate differential narrows 150bp+
4.MoF intervention provides floor at 155, creating asymmetric risk
5.Steady yen appreciation preferred over sharp moves by authorities
Risk Scenarios
Bull case140-143
BoJ hikes to 1.0%, Fed cuts to 2.0%, massive carry unwind
Base case146-150
BoJ to 0.75%, Fed to 3.0%, gradual normalization
Bear case160-165
BoJ pauses at 0.25%, global inflation re-accelerates, carry resumes
Analysis Summary
Yen mean reversion is our second-highest conviction call. BoJ normalization to 0.50-0.75% narrows rate differentials. Japanese institutional repatriation flows support yen. USD/JPY to decline to 146 by year-end. Steady appreciation rather than sharp moves.