UBS keeps Japanese yen neutral on Fed, BOJ policy divergence

UBS remains neutral on the Japanese yen, arguing that recent FX intervention only provided temporary relief and did not change the broader bearish setup for the currency. The bank says USD/JPY remains supported by a hawkish Federal Reserve and only gradual tightening by the Bank of Japan. UBS expects the pair to stay elevated, forecasting USD/JPY at 160 by end-2026 and 158 by mid-2027. A sustained yen recovery would likely require weaker U.S. data prompting Fed easing, plus a more forceful BOJ response. The article implies continued upside pressure on USD/JPY and limited yen strength in the near term.