Goldman Sachs just moved the goalposts on the yen, and not in Japan’s favor. The investment bank now expects the USD/JPY pair to hit 165 within twelve months, a significant jump from its previous target of 155.
The revised forecast reflects what currency traders have been watching play out in real time: the yen has been trading above 160 against the dollar since early June 2026, weighed down by a stubborn interest rate gap between the US and Japan. Goldman’s new three-month target sits at 162, with the six-month projection at 163, both revised upward from earlier estimates of 160 and 158, respectively.
Why Goldman turned more bearish on the yen
US yields remain elevated, the Federal Reserve isn’t rushing to cut rates, and the Bank of Japan is taking a gradual approach to tightening monetary policy. Goldman’s analysts point to limited US recession risks in the near term, which keeps the Fed from feeling any urgency to slash rates. Meanwhile, Japan faces ongoing fiscal strains that constrain how aggressively the BoJ can move without destabilizing its own bond market.
The bank’s previous forecasts had already anticipated yen weakness persisting above 150, driven by fiscal and growth differentials between the two economies.
