CIO View USDJPY

UBS has updated its USDJPY forecast following a 25bps rate hike by the Bank of Japan and a delay in Federal Reserve rate cut expectations. Despite higher near-term targets, the firm maintains a bearish long-term outlook for USDJPY.

Key Takeaways

• 1.The Bank of Japan raised policy rates to 1.0% and is expected to conduct further 25bps hikes in December 2026 and June 2027.
• 2.Fed rate cut expectations have been delayed to March 2027, prompting upward revisions to USDJPY price targets.
• 3.Despite near-term Fed hawkishness, the USDJPY outlook remains skewed to the downside due to narrowing yield differentials and stretched short-yen positioning.

Table of Contents

• CIO View: USDJPY
• Investment implications
• Appendix

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