HSBC sharply lowers 2025 USD/JPY forecasts

HSBC has updated its forecasts for the Japanese yen against the U.S. dollar. The bank lowered its predictions for each quarter this year. For Q1, the forecast decreased from 154 to 145. For Q2, it went down from 156 to 148. Q3 saw a drop from 158 to 150, and for Q4, the prediction changed from 160 to 154. The bank notes that interest in the yen has surged among investors. Recent data from the Commodity Futures Trading Commission shows that long positions in yen futures have reached record highs. Traders have shifted from being net short to net long on the yen. HSBC believes several factors are driving this positive outlook for the yen. One key reason is that the Bank of Japan's plan to raise interest rates seems more stable now. Additionally, the yen is becoming a more attractive safe-haven currency compared to the U.S. dollar. This shift comes as worries grow about the slowing U.S. economy.