UBS raises USD/JPY forecast on elevated energy prices/ - Investing.com South Africa
UBS's upward revision of its USD/JPY forecast reflects expectations regarding persistently high energy prices, which are expected to exert upward pressure on the yen. This raises questions about the consensus outlook, particularly given the current spot rate of 157.0000 and the historical consensus forecasts that have been gradually declining.
What the desk is arguing
The desk believes that USD/JPY may move higher, especially in light of UBS’s new forecast being anchored in real economic factors like energy prices. Sustained high energy prices could lead to a weaker yen as Japan's energy dependence makes it vulnerable to imported inflation.
Moreover, with the current consensus target for March 2026 sitting at 154.5000, there is a notable divergence between market expectations and UBS's raised outlook, suggesting that traders should reconsider their positioning in anticipation of further yen depreciation.
Where it sits in our coverage
The current consensus target for USD/JPY is 154.5000 with a range of 150.0000–157.0000. This aligns with the opinions of firms like **Goldman** and **Barclays**, which also forecast lower targets compared to UBS. The consensus reflects a broader expectation of a gradual strengthening of the yen over the coming months, but UBS's revision encourages a re-evaluation of this stance.
Specific firm targets for December 2026 indicate a generally bearish outlook:
- **JPMorgan**: 164.0000 - **Goldman**: 148.0000 - **Morgan Stanley**: 140.0000
How other firms see it
While UBS has adopted a bullish stance on USD/JPY, many firms remain cautious. **Goldman** and **Morgan Stanley** hold targets that suggest a more contained view, significantly lower than UBS's forecast, indicating skepticism over sustained weakness of the yen driven by energy prices.
- **Goldman**: 155.0000 (Mar26), 148.0000 (Dec26) - **Morgan Stanley**: 150.0000 (Mar26), 140.0000 (Dec26) - **Barclays**: 155.0000 (Mar26), 149.0000 (Dec26)
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01UBS has raised its USD/JPY forecast, citing elevated energy prices as a significant factor.
- 02Current consensus forecasts show a lower outlook compared to UBS's recent bullish revision.
- 03Other firms maintain bearish positions on USD/JPY, suggesting a potential divergence in market sentiment.
Market implications
UBS's revision could shift market sentiment, prompting traders to reassess positioning especially amid rising energy costs. A shift towards a higher USD/JPY could lead to increased volatility if traders follow suit with new benchmarks.
Risks to this view
A key risk lies in the persistence of high energy prices; should they decline, the yen might strengthen and challenge UBS's expectations. Additionally, global economic conditions and potential monetary policy changes in Japan or the U.S. could further complicate the outlook.
Sources & References
How we cover this story
Cross-firm research
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