Recently, I’ve noticed that the fluctuations in the USD/JPY pair are becoming increasingly more interesting. The Japanese yen has truly been dropping badly lately. It had just rebounded from Japanese authorities’ intervention at the end of April, only to be pushed back down again. With expectations for the Fed to raise rates heating up, along with concerns about Japan’s fiscal expansion, under this double blow the yen simply can’t hold up.

Institutional views are now highly split. At JPMorgan, they remain firmly bullish on USD/JPY. They believe the global monetary policy cycle is extremely unfavorable for the yen, and the policy mix of Sanae Takaichi only adds fuel to the fire—surging inflation, the yen continuing to depreciate, and oil prices staying high—all of which strengthen their conviction that the yen will fall. JPMorgan is sticking to its target of 164 in Q4 2026 without wavering. Even though short-term official intervention may be somewhat limited, they are confident that USD/JPY will eventually break through the current range and keep rising.

However, Bank of America Securities’ stance has started to soften. They upgraded their yen rating from bearish to neutral and cut their USD/JPY forecast for the end of 2026 from 157 to 152, citing improving structural capital flows for the yen and vulnerabilities specific to other major currencies. BofA believes that while the yen is still being suppressed for now, the conditions for a mid-term reversal are gradually building up.

BofA listed three possible triggers that could drive a bullish move, and I think this analysis is quite reasonable. The first is a break of USD/JPY above 160 that triggers policy intervention. The second is the 10-year Japanese government bond yield nearing 3%, lifting real interest rates. The third is Brent crude falling below $90 per barrel, improving Japan’s trade situation. Once these conditions are met, the yen could really turn things around.

Morgan Stanley’s view is more straightforward. They say the yen is currently facing two extremes of two-way risks, and the Bank of Japan’s policy meeting in June is the key moment that will determine its fate. If the BOJ does not raise interest rates in June, the yen could keep falling all the way to 170. But if they do hike rates, and the global economic situation stabilizes, the yen has a chance to rebound to around 140. Judging from overnight index swaps, traders currently estimate the probability of a June rate hike at about 78%, which is actually quite high.

In short, for the USD/JPY pair, over the next few weeks it comes down to what the June central bank decides. Once the decision is made, the pair could end up choosing a position somewhere between 152 and 164, with plenty of room for volatility.