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Gold Price Forecast: XAU/USD remains vulnerable as sellers target $4,000

USD/JPY Price Forecast: Slips below nine-day EMA, 157.00

Gold and Silver sell signals trigger [Video]

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USDJPY added more rebound towards 159.00 so far. As we see over the chart, the main resistance zone remains at the 159.50-160.00 zone, which keeps pressure over the pair for another drop toward 153.90 and below.

GBP/JPY Price Forecast: Pound dives below 208.00 following rejection at 209.00

US dollar bulls returned in force last week, with net-long exposure rising by $12.5 billion to $17.3 billion – the fastest weekly increase in seven years. Meanwhile, futures traders increased bearish exposure to both the euro and British pound as the dollar rally gathered momentum.

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How to Read the COT Report to Track Forex Market Sentiment

US Dollar Longs Surge as Euro and Pound Positioning Turns Bearish
Large Speculator Positioning from the COT report

Source: CFTC (COT), LSEG

US Dollar: Net-longs rose at their fastest weekly pace in seven years by $12.5 billion to $17.3 billion
EUR/USD: Asset managers reduced net-longs by 35k contracts and large specs increased net-shorts by 25k contracts
GBP/USD: Net-shorts increased a combined 50.5k contracts to mark their fastest weekly rise in three months
USD/JPY: Traders remained net-long by a combined 113k, despite a reduction of around 58k contracts last week
USD/CHF: Only minor adjustments kept net-short exposure to the Swiss franc by a combined 62.2k contracts
USD/CAD: Prices continued to fall at a faster pace than net-shorts increased, suggesting the late surge of gross-longs have since been forced to cover
AUD/USD: Open interest fell at the fastest weekly pace on record, though net-short exposure only increased marginally
NZD/USD: Large specs and Asset managers reverted to net-short exposure

Asset Manager Positioning | COT Report

Source: CFTC (COT), LSEG

FX Futures Positioning | COT Report (IMM Data)
US Dollar Index (DXY) Futures Positioning | COT Report
We saw a strong influx of bullish bets on the US dollar last week, with net-long exposure rising by $12.5 billion to $17.3 billion – the fastest weekly increase in seven years. And I suspect we’ll see a further increase by the time the next COT report drops, given DXY was only up 0.4% by Tuesday’s close – and went on to rise a further 0.8% by Thursday’s high.

The US dollar index has now rallied 2.6% in 11 days, so I do not think Friday’s pullback is enough to call an end to this rally. Especially since neither the US dollar index nor net-long exposure is near a sentiment extreme.

Traders have a plethora of Fed members speaking this week, alongside ISM, NFP and PCE inflation. My guess at this stage is that they will show a strong economy with inflationary pressures, which leaves little room for Fed members to be any less hawkish than they have been since their last hike.

Source: CFTC (COT), ICE, LSEG

This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of FOREX.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com.

EUR/USD Futures Positioning | COT Report
My assumption over the past few months that the euro had bottomed is on the brink of being invalidated. But with momentum moving aggressively towards those swing lows, we may not need to wait for the break to invalidate it. The way prices move to or from a level can sometimes be just as, or even more, important than the level itself.

Net-short exposure to EUR/USD futures rose to a five-week high among large speculators, nearly doubling after increasing by 25k contracts over the week. Asset managers reduced net-longs by 35k, resulting in an effective combined shift of around 60k contracts towards a more bearish euro position.

Source: CFTC (COT), CME, LSEG

GBP/USD Futures Positioning | COT Report
It appears the British pound wants to head for its range lows around 1.3150, judging by how bearish momentum is accelerating towards the June low. Gross shorts have been trending higher for a couple of years, yet interestingly, net-short exposure is not flashing an imminent sentiment-extreme warning. The US dollar remains in the driving seat, though diminishing odds of a BOE hike could also decide how quickly GBP/USD breaks that June low – if it takes that route.

Source: CFTC (COT), CME, LSEG

USD/JPY Futures Positioning | COT Report
I stand by my long-held assumption that we saw the low for the Japanese yen this year back in June. While it retraced lower for a second week, a bullish hammer formed on the weekly chart, suggesting the yen is trying to form a swing low.

While large speculators and asset managers trimmed gross longs, they’re not exactly in a rush to short this market after several rounds of intervention. Both sets of traders remain net-long, which supports my ‘buy the dip’ bias for the yen and translates into a ‘fade the rally’ bias for USD/JPY.

Source: CFTC (COT), CME, LSEG

EUR/GBP Price Forecast: Fails at 0.8610 amid higher Oil prices, BoE hawkishness

Pound-Euro could remain under pressure if Eurozone inflation accelerates, while any UK GDP revision may drive Sterling volatility. The Pound Euro (GBP/EUR) exchange rate fell to a 12-week low last week as weaker UK data dented Sterling and upbeat Eurozone data supported the single currency.

At the time of writing, GBP/EUR was trading at €1.1615, down around 0.4% on the week.

Latest — Exchange Rates:

Pound to Euro (GBP/EUR): 1.162689 (+0.11%)

Pound to Dollar (GBP/USD): 1.324595 (+0.27%)

Euro to Dollar (EUR/USD): 1.139251 (+0.16%)

DAILY RECAP:

The Pound (GBP) began the week on a weaker footing after UK consumer confidence dropped to a three-year low.

Sterling then struggled after figures revealed a sharp rise in UK government borrowing in August.

GBP faced fresh selling pressure midway through the week as the UK services PMI fell more sharply than forecast, dropping to 51.7 in September from 52.5 in August.

The Pound remained subdued as further evidence of softer consumer spending emerged. The latest Confederation of British Industry’s (CBI) distributive trades survey showed retail order volumes had fallen to a record low in September.

Sterling recovered some ground towards the end of the week after Bank of England (BoE) Governor Andrew Bailey warned that persistently high energy prices could make it more difficult for the central bank to avoid raising interest rates. However, GBP remained lower overall.

Meanwhile, the Euro (EUR) faced modest headwinds at the start of the week after Germany’s regional election results rattled EUR investors.

EUR then wavered amid a lack of Eurozone data, with easing oil prices helping to soothe concerns about an energy crunch while a stronger US Dollar (USD) applied pressure.

The Euro subsequently found support as September’s Eurozone manufacturing and services PMIs both exceeded expectations, pointing to stronger-than-forecast activity across the bloc.

EUR extended its gains as Germany’s latest IFO survey showed business sentiment climbing to a three-year high in September.

However, the single currency came under pressure at the end of the week after German consumer confidence deteriorated more than expected.

Near-Term GBP/EUR Forecast: Eurozone Inflation to Propel Euro Higher? Looking ahead, EUR investors will likely focus their attention on the Eurozone’s latest consumer price index, due on Friday. September’s flash CPI is forecast to show that headline inflation accelerated from 3.2% to 3.5%, while core inflation rose from 2.4% to 2.6%. This could boost the Euro by fuelling bets on another European Central Bank (ECB) interest rate hike.

Meanwhile, the UK economic calendar is relatively quiet this week, with the final GDP figures and manufacturing PMI the main releases likely to attract attention.

Wednesday’s GDP figures are expected to confirm that the UK economy lost some momentum in the second quarter, while still maintaining a relatively solid pace of growth. A downward or upward revision could see Sterling come under pressure or strengthen, respectively.

Later in the week, the final manufacturing PMI could provide some modest support for GBP if it confirms that activity improved in September.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.

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Gold price forecast: Does $4,200 hold? Everything else depends on it

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AUD/JPY Price Forecast: Recovers above 110.50, but technical outlook stays bearish

TL;DR: Gold broke below 4,200 on Monday after taking out 4,234.68 and the 61.8% retracement at 4,230.70, turning a persistent oil-to-rates headwind into technical damage. 4,113.82 is the next momentum test, and 3,937.19–3,942.43 is the larger structural verdict.

Macro Pressure Finally Produces a Technical Break Gold’s rate problem has moved from a persistent fundamental headwind into a more serious technical deterioration. Bullion fell nearly 2% in Asian trading on Monday, breaking below 4,200 after taking out 4,234.68 support and, more importantly, the 61.8% retracement of the 3,942.43–4,697.07 rally at 4,230.70.

That overlap matters. The 4,230 area wasn’t simply another short-term support level; it was the Fibonacci threshold holding together the argument that the rebound from July’s 3,942.43 low could still develop into something more durable. Gold has now retraced more than 61.8% of that advance. The move doesn’t yet prove the larger downtrend from 5,598.75 has resumed, but it materially weakens the bullish interpretation of the August rebound.

There’s one important timing qualification. Monday’s session is still underway. Gold has broken the support cluster intraday, but a daily close below 4,230 would provide stronger confirmation. Likewise, price is now trading below the 55-week EMA around 4,225, but a weekly close is needed before that can be treated as a confirmed higher-timeframe break. The signal is bearish; the degree of confirmation is still developing.

Iran Diplomacy Stalls, Keeping Oil Pressure Alive The latest selling comes after another setback in US-Iran diplomacy. President Donald Trump said on Saturday that he rejected Iran’s latest proposal, which sought to link reopening the Strait of Hormuz and restarting nuclear negotiations with US concessions including easing the naval blockade and oil sanctions. US Ambassador to the United Nations Mike Waltz subsequently argued Tehran was asking for “everything up front,” including sanctions relief and access to frozen assets.

But the diplomatic channel hasn’t closed. Trump told Axios on Sunday that he expects more talks with Iran this week, while Qatari mediators continue shuttle diplomacy between the two sides. Iranian Foreign Minister Abbas Araghchi also said Tehran remained prepared for negotiations. The correct market framing is therefore an impasse rather than the death of diplomacy.

That distinction matters because Gold doesn’t need another dramatic military escalation to stay under pressure. What matters for bullion is whether diplomacy can produce enough progress to relieve the energy-price shock. It hasn’t done so yet. Brent rose around 1.6% and WTI about 1.1% in early Monday trading as doubts over a near-term US-Iran settlement returned.

The Oil-to-Rates Channel Still Dominates For Gold, this is an extension of the mechanism that has dominated since the Iran war began in late February. Higher geopolitical tension has repeatedly transmitted first through oil, inflation expectations, and monetary-policy pricing, leaving the rates channel more important for Gold than the geopolitical headline itself.

That pressure remains intact. Markets entered Monday with roughly a two-thirds probability of another Fed hike in October after September’s quarter-point increase to 3.75–4.00%. Fed officials have also continued emphasizing that inflation pressure is no longer confined to oil.

The significance of Monday’s move is therefore not that Gold suddenly failed to respond to geopolitical risk. That pattern is already familiar. The change is that the same macro pressure has now broken a technical level that had survived the earlier phases of the selloff.

Gold had spent much of September weakening under rising Treasury yields, a firmer Dollar, and renewed Fed hike expectations without decisively destroying the structure of the 3,942.43–4,697.07 rebound. Monday’s break through 4,230 changes that. The rates story no longer merely explains why Gold is struggling to rally; it’s now beginning to reshape the chart.

ActionForex’s Technical View on Gold: 4,113 Becomes the Next Downside Test With 4,230 giving way, attention shifts to 4,113.82, the 61.8% projection of the decline from 4,697.07 to 4,234.68, projected from the 4,399.58 rebound high.

That level is important for momentum rather than for the larger structural verdict. A firm break below 4,113.82 would suggest the decline from 4,697.07 is gaining force and would increase the risk of an extension toward the 3,937.19–3,942.43 zone. The 100% projection lies at 3,937.19, almost exactly overlapping July’s 3,942.43 low.

The pattern from 4,697.07 is still not clearly impulsive. It can still be interpreted as a corrective decline, potentially a zigzag. But that argument is becoming less comfortable after Gold retraced more than 61.8% of the preceding rise.

If the 3,942.43–4,697.07 advance were the beginning of a new impulsive uptrend, bulls would normally prefer to see the retracement contained before this point. Breaking deeply through the move instead raises the probability that the August rally was a B-leg or corrective rebound inside the larger decline from 5,598.75. That’s not confirmation. The confirmation test sits lower.

3,942 Is the Bigger Structural Decision Point The 3,937.19–3,942.43 zone is now the more consequential level. If Gold reaches that area, holds it, and rebounds in a visibly corrective, overlapping structure that subsequently fails beneath the 4,399.58–4,402.40 region, the price action could still fit a broader corrective sequence rather than an accelerating bearish trend.

A clean and forceful break below 3,942.43, however, would change the argument materially. It would take out the origin of the entire August rebound and provide much stronger evidence that the larger decline from 5,598.75 has resumed.

The next higher-timeframe downside reference would then be 3,606.83, the 50% retracement of the entire 1,614.92–5,598.75 advance. That remains a distant target and shouldn’t be treated as the immediate destination simply because 4,230 has broken. Gold first has to confirm through 4,113.82 and then 3,942.43.

This sequencing is important: 4,230 is the warning, 4,113 is the momentum test, and 3,942 is the larger trend test.

Bulls Need to Reclaim 4,315 First Near term, the first level capable of challenging the bearish setup is 4,315.82. It sits almost directly alongside the four-hour 55 EMA around 4,312, making the area a useful combination of price resistance and dynamic resistance.

As long as 4,315.82 caps, near-term risk remains on the downside. The four-hour RSI has already fallen to around 30, so a rebound wouldn’t be surprising after Monday’s sharp decline. But an oversold bounce alone wouldn’t repair the structure. Gold needs to reclaim 4,315.82 before there’s meaningful evidence the breakdown is stalling rather than merely pausing.

The daily picture is also unfavorable. Gold had already failed around its 55-day EMA, now near 4,333, before Monday’s renewed selloff. The weekly chart adds another warning with price slipping below the 55-week EMA near 4,225. Neither signal alone establishes a resumed long-term downtrend, but together they increase the burden on bulls to reverse the deterioration quickly.

The Rates Story Now Has a Chart to Match It The macro argument against Gold has been visible for weeks: persistent energy pressure, elevated inflation risk, higher Treasury yields, and renewed Fed tightening expectations. Until now, the technical damage had been less decisive. That’s what Monday has started to change.

Diplomacy with Iran is still alive, and any concrete breakthrough capable of bringing oil materially lower could weaken the rates pressure on Gold. But discussion alone is no longer enough. As long as 4,315.82 caps and the oil-to-inflation-to-rates mechanism remains intact, near-term risk stays skewed lower.

The first downside target is 4,113.82. The real verdict comes around 3,937.19–3,942.43. A defense of that area would keep the larger corrective interpretation alive. A decisive break would turn Monday’s loss of 4,230 from a warning into something much more important.

Key Takeaways Gold broke below 4,234.68 and the 61.8% retracement at 4,230.70, retracing more than 61.8% of the 3,942.43–4,697.07 rally and weakening the bullish reading of the August rebound. Confirmation is still developing: a daily close below 4,230 and a weekly close below the 55-week EMA near 4,225 are needed to treat the break as decisive. US-Iran talks are at an impasse, not dead, with Trump expecting more talks this week; oil rose in early Monday trading, keeping the oil-to-rates channel intact. 4,113.82 is the momentum test, and a firm break would raise the risk of an extension toward the 3,937.19–3,942.43 zone, the larger structural decision point. Bulls need to reclaim 4,315.82, near the four-hour 55 EMA around 4,312, before there’s meaningful evidence the breakdown is stalling.

ActionForex

ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.

EUR/USD selloff gathers steam — Can bulls find a lifeline?

Silver Price Forecast: XAG/USD falls to near $62.00 amid Fed rate hike odds

Key Highlights

EUR/USD failed to stay above 1.1500 and extended losses. A bearish trend line is forming with resistance at 1.1425 on the 4-hour chart. GBP/USD declined heavily and traded below 1.3320. USD/JPY struggled to climb above 159.00 and corrected some gains. EUR/USD Technical Analysis The Euro struggled to stay in a positive zone against the US Dollar. EUR/USD started a fresh decline and traded below the 1.1465 support.

Looking at the 4-hour chart, the pair settled below 1.1450, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). The bears even pushed the pair below 1.1380. A low was formed at 1.1359, and the pair started a consolidation phase.

On the upside, immediate resistance could be 1.1420. There is also a bearish trend line forming with resistance at 1.1425. The trend line is close to the 23.6% Fib retracement level of the downward move from the 1.1654 swing high to the 1.1359 low.

A close above the 1.14250 resistance could spark a recovery wave. The next major hurdle might be 1.1455. The main resistance could be 1.1500 and the 100 simple moving average (red, 4-hour).

A close above 1.1500 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1550. If the pair stays below 1.1450, there could be a fresh decline toward the 1.1360 zone. The first major support might be 1.1320. A close below 1.1320 might accelerate the decline. In the stated case, the bears could aim for a move to 1.1240.

Looking at GBP/USD, the bears remained in action, pushed the pair below 1.3250, and they might aim for a move to 1.3150.

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Gold-DXY correlation hits -0.93 over five sessions
Gold-US 2-year correlation tightens to -0.98 over five sessions
US 2-year yield rise ranks in 98th percentile since 1988
Gold hit as dollar and yields push higher
Gold has come under renewed pressure in early Asian trade on Monday, falling to its lowest level since early August as the US dollar and Treasury yields push higher alongside another jump in crude oil futures.

The move follows Donald Trump’s rejection of an Iranian proposal that would have reopened the Strait of Hormuz within seven days and brought an end to fighting, subject to a series of conditions put forward by Tehran that the US has repeatedly said are unacceptable. Those conditions have remained a major sticking point in negotiations.

Gold moves close to lockstep with macro drivers
For gold and the broader precious metals complex, those moves matter because both the US dollar index and nominal US yields have maintained a strong inverse relationship recently, considerably stronger than with other traditional drivers such as real yields.

Over the past five sessions, gold’s correlation with the DXY has hit -0.93 in levels, towards the extremes seen in data going back several decades. The inverse relationship has also remained meaningful over longer windows, with the 20-session correlation sitting around -0.59.

The relationship with nominal Treasury yields has been even stronger recently. Over the past month, gold’s correlation with the US 2-year, 5-year and 10-year yields has sat at around -0.76, -0.79 and -0.80 respectively. Over the past five sessions, those relationships in levels have tightened further to roughly -0.98, -0.99 and -0.97.

Put simply, that’s close to lockstep territory. Over the past week, gold and nominal US yields have moved almost perfectly in opposite directions, while the inverse relationship with the DXY has also been exceptionally strong.

Source: LSEG

Hawkish Fed repricing hits extreme territory
Not only is gold reacting to movements across the US yield curve, but at the front end the move has been outright extreme. Over the past 20 sessions, the US 2-year yield has risen around 55 basis points, placing the increase around the 98th percentile of comparable four-week moves since 1988. At its most extreme last week, the rise exceeded 66 basis points, ranking among the largest 1% of moves over that period.

As such, it comes as little surprise that gold has struggled. You could also argue it’s pretty remarkable that the price has managed to hold up as well as it has given the velocity of the move in US yields.

Gold bears eye a break of key September support

Source: TradingView

After struggling above $4,300 late last week, gold is now testing the lower end of the falling wedge structure it has been carving out for much of September.

On the four-hourly chart, the price is already trading beneath $4,235, the low set on September 17, with the lower boundary of the wedge now intersecting with horizontal support at $4,220. That level has acted as support and resistance on multiple occasions this year, making it the immediate downside level of focus.

If we were to see a test and failure to break beneath the confluence of those supports, longs could be set with a tight stop beneath for protection, targeting $4,245, the low set on September 25, and then $4,300, where the price struggled to break through heading into the weekend.

If the support structure were to break cleanly, preferably followed by a back test and rejection from the zone, shorts could be initiated with a tight stop above for protection, targeting $4,165 and then $4,115.

The overall message is one that prefers selling into strength and downside breaks, although I want confirmation from price action before acting on that bias.

PBOC sets USD/CNY reference rate at 6.7399 vs. 6.7489 previous

AUD/JPY price outlook: Australian Dollar/Japanese Yen holds above 1 (100) support arc. Potential rebound toward 111.12

Daily Spot Gold (XAU/USD) Spot gold settled slightly higher Friday despite being rejected by the 50-day moving average at $4,317.56 and a key 50% level at $4,319.61.

The main trend is down according to the daily swing chart. A trade through $4,399.67 will change the main trend to up. A move through $4,235.17 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $4,244.27 will signal a resumption of the downtrend.

The long-term range is $3,942.10 to $4,697.11. Its retracement zone is $4,319.61 to $4,230.51. Gold has been testing this zone for support since September 2, including posting a pair of main bottoms at $4,282.62 and $4,235.17, and the minor bottom at $4,244.27.

Retracement zone resistance is $4,384.59 to $4,405.59. The September main top at $4,399.67 fell inside this zone.

The main trend is controlling my downside bias with the close under the 50-day MA at $4,317.56 steering momentum. Overcoming the 50-day MA will weaken my outlook and could lead to a bullish shift in momentum that could lead to a near-term test of the main top at $4,399.67 and possibly a change in trend to up.

The price I am eyeing on the downside is the 61.8% level at $4,230.51. This could be major support or a potential trigger point for an acceleration to the downside.

What to Watch The 50-day at $4,317.56 and the 50% level at $4,319.61 rejected Spot Gold on Friday. The rate trade kept the metal below that cluster all week. October hike odds at 66% and December at 93% are not giving buyers room. The 10-year near 5.16% after reaching a 19-year high Thursday is the number Spot Gold has to trade against heading into next week.

The diplomacy story took some of the war bid away Friday. Iran’s nuclear position keeps the talks from becoming a clean resolution. The safe-haven support is thinner than it was Monday. The rate pressure is not.

The $4,244.27 minor bottom and the $4,235.17 main bottom are the downside levels. The 61.8% at $4,230.51 is sitting below both. That area has held since early September. A break through it changes the trade. Above, buyers have to clear the 50-day cluster before the $4,384.59 to $4,405.59 resistance zone and the $4,399.67 main top come back into play. Friday’s bounce stopped $2 short of the average. That tells you where the sellers are sitting.

If you’d like to know more about how to trade gold, please visit our educational area.

Daily Spot Gold (XAU/USD) Spot gold settled slightly higher Friday despite being rejected by the 50-day moving average at $4,317.56 and a key 50% level at $4,319.61.

The main trend is down according to the daily swing chart. A trade through $4,399.67 will change the main trend to up. A move through $4,235.17 will signal a resumption of the downtrend.

The minor trend is also down. A trade through $4,244.27 will signal a resumption of the downtrend.

The long-term range is $3,942.10 to $4,697.11. Its retracement zone is $4,319.61 to $4,230.51. Gold has been testing this zone for support since September 2, including posting a pair of main bottoms at $4,282.62 and $4,235.17, and the minor bottom at $4,244.27.

Retracement zone resistance is $4,384.59 to $4,405.59. The September main top at $4,399.67 fell inside this zone.

The main trend is controlling my downside bias with the close under the 50-day MA at $4,317.56 steering momentum. Overcoming the 50-day MA will weaken my outlook and could lead to a bullish shift in momentum that could lead to a near-term test of the main top at $4,399.67 and possibly a change in trend to up.

The price I am eyeing on the downside is the 61.8% level at $4,230.51. This could be major support or a potential trigger point for an acceleration to the downside.

What to Watch The 50-day at $4,317.56 and the 50% level at $4,319.61 rejected Spot Gold on Friday. The rate trade kept the metal below that cluster all week. October hike odds at 66% and December at 93% are not giving buyers room. The 10-year near 5.16% after reaching a 19-year high Thursday is the number Spot Gold has to trade against heading into next week.

The diplomacy story took some of the war bid away Friday. Iran’s nuclear position keeps the talks from becoming a clean resolution. The safe-haven support is thinner than it was Monday. The rate pressure is not.

The $4,244.27 minor bottom and the $4,235.17 main bottom are the downside levels. The 61.8% at $4,230.51 is sitting below both. That area has held since early September. A break through it changes the trade. Above, buyers have to clear the 50-day cluster before the $4,384.59 to $4,405.59 resistance zone and the $4,399.67 main top come back into play. Friday’s bounce stopped $2 short of the average. That tells you where the sellers are sitting.

If you’d like to know more about how to trade gold, please visit our educational area.

Crédit Agricole expects renewed Yen weakness before a 2027 recovery, while JPMorgan sees near-term demand from Japanese investors. Crédit Agricole expects the US Dollar to Japanese Yen (USD/JPY) exchange rate to climb to 163 by December 2026, even as JPMorgan identifies signs of Japanese buying interest in the Yen.

Friday's close of 157.29 leaves Crédit Agricole's year-end forecast around 3.6% above the market.

USD/JPY fell 0.97% that day, surrendering most of its weekly advance as the Yen recovered following fresh comments from Finance Minister Satsuki Katayama about US concerns over Yen weakness.

Crédit Agricole's path falls from 163 in December to 162 in March 2027, 161 in June, 158 in September and 156 in December 2027.

It argues that official currency support needs stronger backing from monetary policy:

"Record levels of intervention have capped USD/JPY's rally at 164, but for the JPY to stage a sustainable rally, the BoJ needs to accelerate the pace of its rate hikes, reducing the currency's appeal as a carry funder."

JPMorgan's 157.80 pivot has already given way JPMorgan's earlier assessment identified two support levels:

"Rate check pivot around 157.80 will provide some short term support with 156.50/60 below"

Friday's close was beneath that first level, leaving 156.50-156.60 as the next lower area to watch.

The desk saw more local Yen demand near recent USD/JPY highs, although overseas institutional investors had increased Yen selling during the week.

It also questioned how effectively intervention could offset broader pressures:

"As you know I really do not doubt the intentions but I am starting to worry about the efficacy of the actions so far in the face of what is a huge energy and fixed income shock."

Crédit Agricole similarly cites elevated oil prices and Japanese fiscal concerns as obstacles to lasting Yen gains.

The 156 end-2027 forecast is less than 1% below Friday's close, but the intervening path includes renewed Yen weakness towards 163 before that recovery.

Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.