Goldman Sachs has declared carry trades are enjoying their most favorable environment in more than two decades. The call comes as the Japanese yen continues its slow-motion slide against the US dollar, creating a widening gap that traders are exploiting with increasing enthusiasm.
The bank updated its USD/JPY forecast on July 6, 2026, and the numbers weren’t kind to yen bulls. Goldman now expects the dollar to hit 162 yen within three months, 163 in six months, and 165 within a year. That last figure is a meaningful jump from their previous target of 155.
The yen is already trading near levels not seen in roughly 40 years. Japanese authorities have not exactly been sitting on their hands. Between April and May 2026, they intervened to the tune of over 11 trillion yen, attempting to prop up their currency. The interventions yielded limited results against the yen’s broader depreciation trend.
The interest rate differential between the US and Japan remains stubbornly wide. The Bank of Japan has been adjusting its monetary policy at a pace that can charitably be described as glacial. Meanwhile, Japan’s fiscal challenges continue to pile up in the background, giving the yen even less reason to strengthen.
