Investing.com — UBS has lowered its forecasts for the , to 145 for both the end of 2025 and the end of 2026, down from previous estimates of 157 and 161 respectively.
The adjustment reflects growing confidence in the Bank of Japan’s (BOJ) ability to deliver further rate hikes, in line with UBS economists’ call for a 25 basis point rate hike at the December 19 policy meeting.
“Increasing confidence in the BOJ’s ability to raise rates further has been the main driver behind this move,” UBS analysts noted, as the yen continues its recent outperformance against the dollar.
The revision to UBS’s USDJPY outlook is also in line with the bank’s broader view on currency trading. The company remains short and expects it to fall to 151 by the end of 2025 and to 145 by the following year.
In the broader G10 currency market, UBS has seen a period of stability in recent weeks, with the USD trading near its mid-November highs.
This calm persisted despite President-elect Donald Trump’s tariff-related announcements on social media. Although markets initially viewed these proclamations as a negotiating tactic, UBS warned that this sentiment could be “short-lived.”
Moreover, political uncertainty in Europe, including a vote of no confidence against the French government, could weigh on the euro.
“We now see the potential for a larger and more lasting impact than in June, given the weaker growth backdrop and moderate ECB repricing,” UBS analysts said. This situation supports their target of 1.04 by the end of 2025.
