TechFlow news, November 25 — According to Jinshi Data, Morgan Stanley strategists said that if the Federal Reserve continues cutting interest rates amid increasing signs of a U.S. economic slowdown, the Japanese yen could appreciate nearly 10% against the U.S. dollar over the coming months. Strategists including Matthew Hornbach wrote that USD/JPY is currently trading away from fair value, and if this relationship reverts, the exchange rate would fall by the first quarter of 2026 as declining U.S. Treasury yields may lower fair value. They noted, "Meanwhile, Japan's fiscal policy is not particularly expansionary," and expect the yen to face renewed downward pressure as the U.S. economy recovers in the second half of next year and demand for carry trades rebounds. Morgan Stanley forecasts USD/JPY will fall to around 140 by Q1 2026, then rebound to about 147 by year-end.
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