USD/JPY forecast raised to 143 as yen faces political headwinds

USD/JPY trading expectations have been revised higher by UBS, with new targets set at 143 by end-2025 and 140 by end-2026, up from previous forecasts. The yen faces multiple headwinds including Japanese political uncertainty following upcoming leadership changes, continued dovish stance from the Bank of Japan, and strong equity market performance drawing capital away from the safe-haven currency. Despite market pricing in another BoJ rate hike, UBS analysts expect the pair to remain largely range-bound between 140-150. The forecast revision reflects persistent yen weakness amid domestic challenges, though potential US labor market deterioration could limit dollar strength. Technical traders should monitor the 140 level as key psychological support and 150 as resistance, with political developments potentially triggering volatility within this range.