Bank of America Securities has upgraded its view on the yen to neutral from
bearish, citing improving structural flow dynamics, even as the currency weakens
toward 160 per dollar. Strategist Shusuke Yamada also cut his end-2026 forecast
for USD/JPY to 152 from 157.
BofA said a bullish yen outlook would require policy or market shifts, including
USD/JPY rising to 160, Japan’s 10-year JGB yield nearing 3%, or Brent crude
falling below $90 per barrel. The bank also noted that suspected FX intervention
totaling as much as ¥10 trillion ($63 billion) may have taken place between late
April and early May.
Despite persistent weakness driven by rate differentials, BofA highlighted
improving fundamentals, including narrowing bank loan-deposit gaps, rising real
rates, and stronger Japanese equity performance versus US and European markets,
which could support capital inflows and stabilize the currency over time.
