Goldman Sachs has lifted its one‑year forecast for the USDJPY pair from 155 to 165 yen per dollar, signalling a further weakening of the yen.
The bank cites the widening interest‑rate differential between the United States and Japan, Japan’s financial pressures, the sustained high yields on U.S. Treasury securities, and the Bank of Japan’s gradual rate hikes as key drivers of the yen’s decline. It also notes that the currency remains fundamentally undervalued.
Goldman Sachs ranks among the most bearish on the yen, which is trading near its lowest levels since 1986. Risk‑hedge funds increased their short‑yen positions to the highest level since 2017, and 72% of FX traders expect the pair to reach 165 by June next year. The bank views the yen as attractive for carry‑trade strategies and projects 3‑month and 6‑month rates of 162 and 163, respectively, up from its prior 160 and 158 forecasts. It believes any Japanese government intervention will likely have only a short‑term effect.