The outlook for USD/JPY at the end of 2026 has been revised toward a weaker yen, with debate over a consumption tax cut becoming the focus. The new year-end forecast is $1 = ¥147.50, while the year-end 2027 forecast is expected to remain unchanged at ¥140.
Nomura Securities revised its outlook toward a weaker yen in response to the volatility in USD/JPY since the beginning of 2026, citing debate over a consumption tax cut as the immediate focus. Its core scenario is moderate yen and US dollar weakness, with a forecast of $1 = ¥147.50 at the end of 2026 and an unchanged forecast of $1 = ¥140 at the end of 2027.
The trend toward a weaker US dollar is expected to persist for the time being. While rate cuts are expected to resume under the FRB administration, the narrowing interest-rate differential between Japan and the US is also expected to have an impact. The possibility that the broad-based market decline seen in the past will continue through mid-2026 has also been highlighted.
Debate over a consumption tax cut is becoming the market's focus, and periods of instability in the Japanese government bond market are also anticipated. A landslide victory for the Liberal Democratic Party and the Takaichi administration's strong ability to implement policy could temporarily intensify pressure on the yen to weaken, although some analysts believe the scope for fiscal and monetary policy to turn more dovish is limited.
In the short term, debate over funding and instability in the bond market pose risks of yen depreciation. From mid-year onward, however, USD/JPY is expected to move gradually below ¥150 as the possibility of US rate cuts resuming increases.