Goldman Sachs Turns More Bearish on Yen, Sees 165 Per Dollar

Goldman Sachs expects the yen to weaken to 165 per dollar within a year, a more bearish call than its earlier 155 forecast and among the gloomiest on Wall Street.

The revised forecast comes amid the yen’s slump to its weakest level against the dollar since 1986, making it one of 2026’s worst-performing major currencies.

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Why Goldman Sachs Turned Even More Bearish on the Yen

The bank also turned more bearish over shorter horizons. It now sees the pair at 162 in three months and 163 in six months.

Those calls mark a revision from 160 and 158, respectively. Strategist Karen Reichgott Fishman named several forces working against the currency.

These included the higher-for-longer US yields, a low risk of recession, Japanese fiscal pressure, and gradual BoJ hikes.

Why Tokyo’s Defense of the Yen May Not Hold

Japan’s Ministry of Finance remains focused on the currency market. Yet, Goldman expects any official intervention to have a temporary effect.

“In fact, we see no reason for the upward trend in USD/JPY to stop without an unexpected negative US growth shock or a BoJ pivot towards more aggressive policy tightening,” Goldman added.

The positioning backs the bearish call. Hedge funds pushed bearish yen bets to the highest level since 2017 last month.

In addition, traders assign about a 72% chance that the pair will reach 165 by June 2027, according to Bloomberg.

Goldman also expects the dollar to stay firm. It tied that view to the US artificial intelligence (AI) investment boom and energy supply strains.

The bank trimmed its euro forecasts while striking a more optimistic tone on the Indian rupee and Colombia’s peso.

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