Goldman Sachs Downgrades USD/JPY Long-Term Outlook Amid Intervention Risks

Goldman Sachs Research is out with its USD/JPY outlook, highlighting both near-term and medium-term views on the currency pair.

In the short term, Goldman sees downward pressure on JPY persisting if the Federal Reserve hikes interest rates again in October, as their economists expect. This would reduce the case for being short USD/JPY tactically, according to GS.

However, Goldman still views the long-term outlook for USD/JPY as asymmetrical, with a greater risk of downside. Three key factors contribute to this assessment: elevated intervention risks, potential faster Bank of Japan hikes if data warrants it, and shifting portfolio flows over time.