Bank of America Expects USD/JPY to Remain Above 150 Through 2026

Bank of America has reiterated its bearish view on the Japanese yen, forecasting that the USD/JPY exchange rate will stay above the 150 level throughout 2026.

According to the bank’s outlook, the dollar is expected to peak near 160 against the yen in the first quarter of 2026. However, the analysts noted that there is a risk of even further dollar strength if the U.S. economy continues to outperform expectations.

The bank pointed to persistent outward investment by Japanese companies and individual investors as a major factor weighing on the yen. Strong and ongoing capital outflows are expected to continue exerting downward pressure on the currency.

The analysis also highlighted that the Bank of Japan’s policy rate remains low relative to inflation. Bank of America’s economists do not anticipate another interest rate hike before April, suggesting that the central bank remains “behind the curve” in its approach to monetary policy.

In addition, Japanese government bonds have started the year on a weak footing. Bank of America noted that this trend reflects lingering fiscal concerns, which could further influence the yen’s performance in the months ahead.