The bank now expects the yen to weaken further, citing persistent US-Japan rate differentials and Japanese fiscal pressures.
Goldman Sachs lowered its one-year USD/JPY forecast to 165 from 155, marking one of the most bearish calls on the yen among major institutions. The revision reflects widening US-Japan rate differentials, Japanese fiscal pressures, and slow Bank of Japan tightening despite the yen’s undervaluation.
The bank also raised its three-month forecast to 162 from 160 and its six-month forecast to 163 from 158. Hedge fund short positioning on the yen is at its highest since 2017, reinforcing expectations of continued downward pressure unless Fed or BOJ policy shifts materially.
Goldman suggested official intervention would likely be short-lived, with traders viewing yen-buying operations as tactical rather than structural. A 72% market-implied probability of 165 USD/JPY by next June aligns with the bank’s bearish outlook.