UBS Raises USD/JPY Forecast on Energy Price Impact

Key Forecast Revision

UBS has increased its forecast for the USD/JPY exchange rate, citing the impact of elevated global energy prices. The firm now projects the currency pair will reach 155 by June 2026, a significant update from its previous forecast of 152.

Situational Overview

The core reason for the adjustment is the differing energy trade positions of the United States and Japan. As a net energy exporter, the U.S. benefits from higher oil prices, which supports the dollar. In contrast, Japan, a major net energy importer, faces increased economic pressure from a higher import bill, which weighs on the yen.

Economic and Market Impact

UBS has also revised its September 2026 target for USD/JPY to 152, up from 150. However, the bank's longer-term forecasts remain unchanged at 148 for December 2026 and 146 for March 2027. The current strength in the dollar-yen pair is attributed directly to the financial divergence caused by these energy dynamics.

Summary and Outlook

The firm anticipates that global oil prices will stay high in the near term, continuing to support the USD/JPY pair. A potential trend reversal is expected only when geopolitical factors, such as the U.S.-Iran conflict, de-escalate and allow global energy flows to normalize, which would ease pressure on Japan's trade balance.

FAQ

Q: Why did UBS raise its USD/JPY forecast?
A: The forecast was raised due to high global energy prices, which benefit the U.S. as a net energy exporter while pressuring Japan as a significant net energy importer.

Q: What is the new primary forecast for USD/JPY from UBS?
A: UBS now expects the USD/JPY exchange rate to reach 155 by June 2026.

Source: Investing.com