Yen: Still Biased Lower, Targeting 158.40 vs Dollar – UOB

UOB FX strategists Quek Ser Leang and Lee Sue Ann noted in their latest report that USD/JPY retains a constructive outlook after a brief pullback, with the pair closing at 157.37 previously, indicating further upside potential for the dollar. At the time of writing, USD/JPY traded near 157.79, at the upper end of the analysts' projected intraday range.

**Short-term momentum biased to upside**

The analysts expect USD/JPY to trade within a 157.10 to 157.90 range intraday, with the 158.40 level forming stronger resistance above. This view is based on the dollar's resilience in recent price action—despite occasional intraday dips, buying has consistently pushed the pair back to higher levels. Market reports show USD/JPY briefly dipped to 158.58 before rebounding quickly to 159.54, closing nearly flat, suggesting that bullish and bearish forces are roughly balanced around current levels, but the overall bias remains favorable to dollar longs.

**Institutions warn of structural yen weakness**

However, broader institutional views are not optimistic on the yen's outlook. Junya Tanase, head of Japan FX strategy at JPMorgan, stated that the yen's fundamentals are quite weak, and this situation is unlikely to change significantly next year. According to Cailianshe, Tanase's forecast target for USD/JPY by end-2026 is as high as 164, one of the most bearish expectations on Wall Street. He noted that the resurgence of carry trades and the slow pace of Bank of Japan rate hikes are re-emerging as structural factors weighing on the yen.

**Range-bound pattern hard to break**

UOB also emphasized that while the dollar is biased to the upside, any advance may be part of the broader 157.00 to 160.20 range rather than the start of a new trend. This implies that even if the pair approaches the 158.40 resistance in the near term, whether it can break through effectively and open larger upside space remains uncertain. Market participants are closely watching for any intervention signals from Japanese authorities, but most analysts believe that verbal warnings or sporadic intervention alone are unlikely to reverse the yen's current weak pattern.