Goldman Sachs has significantly revised its outlook for USD/JPY, now projecting a near-term target of 150. This substantial shift in forecast comes amid the Bank of Japan (BoJ) showing no signs of hiking rates, along with Goldman's bearish stance on the Yen and a depreciation bias on the Yuan. The investment bank expects the Yen to continue its downward trend, particularly over the next 6 months, unless disrupted by actions from BoJ, the Ministry of Finance, or unexpected weaknesses in U.S. data.

Key Points:

• Revised Projections: Goldman Sachs has upgraded its USD/JPY forecasts to 150 in the next 3 months, 155 in the next 6 months, and 150 in the next 12 months. This is a marked shift from their previous forecasts of 140, 135, and 125 respectively.

• BoJ's Rate Hike Stance: One of the significant factors influencing the revision is the Bank of Japan’s reluctance to hike rates. This diverging monetary policy compared to the U.S. sets up the Yen for further depreciation.

• Bearish on Yen: Goldman has a bearish outlook on the Yen, especially in the next 6 months. The bank believes that as long as equities remain relatively stable, and the BoJ stays away from tightening, the Yen will continue to weaken.

• Caveats: While the projection is notably bullish on USD/JPY, Goldman does note that its predictions could be interrupted by any counteractions from the Bank of Japan or the Ministry of Finance, or by softer patches in U.S. data.

Conclusion:

Goldman Sachs' upward revision of its USD/JPY forecasts signals a bullish sentiment on the currency pair, driven largely by Japan's monetary policy and relative stability in the equity markets. The new targets are among the most optimistic in the industry, adding a compelling layer to the ongoing discussion about the future direction of USD/JPY.