Yen Story Shifts with BoJ Hikes, but Crowded Trades Ahead

The yen's structural story has shifted as Japan's domestic policy mix and global macro backdrop change. The BoJ accelerated hikes, stabilizing the rise in Japan's term premium, which means the currency is no longer standing naked in front of the same policy firing squad.

Goldman Sachs cut its USD/JPY forecasts from 162, 163, and 165 to 158, 155, and 150 over 3, 6, and 12 months but still prefers a tactical short rather than chasing USD/JPY lower here. The bank's economists expect the Fed to hike again in October while the BoJ pauses.

The yen can be structurally attractive but still get punched in the face tactically. Long JPY positioning is crowded, and intervention is probably the only clean near-term catalyst for a sharp move lower.