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Yen gains face pressure as Japan keeps backing USDJPY levels
Analysts cited by ActionForex project divergent USDJPY paths, with Bank of America looking for 149 by year end and CBA targeting 165 by 2Q 2027.
The US dollar has been retreating against the yen amid easing geopolitical risks and renewed interest in the so-called sell America trade that was associated with the trade-war era, a shift that is weighing on USD demand, ActionForex reports.
The yen’s ability to hold its gains is tied to Bank of Japan support, according to the piece, which also points to growing skepticism around US policy after a Wall Street Journal report about reported regular contact between Donald Trump and Kevin Warsh.
ActionForex also outlines what it says are competing forecasts for USDJPY, citing Bank of America expecting the pair to fall to 149 by the end of the year as the BoJ is forced to accelerate monetary tightening to maintain current levels, and CBA projecting USDJPY could rally to 165 by the second quarter of 2027 as the BoJ raises its overnight rate only twice while the Fed tightens three or four times starting in December.
The article adds that carry-trade dynamics could further pressure the yen, noting that coordinated currency intervention helped pull down the Bloomberg EM FX Carry Risk Premia Index by about 1%, while Japan’s interventions in 2024 had driven a 4% slump in that index, and it flags US July employment data as a catalyst that could influence dollar moves across pairs.