Bank of America is maintaining a positive stance on currencies that trade against the Japanese yen, with a clear tilt toward the Australian dollar versus the yen. The bank's outlook rests on a combination of anticipated oil market dynamics and diverging central bank policies, according to a report dated April 1, 2026.
In that report, the firm's commodities team sets its baseline for Brent crude at an average of $92 per barrel in 2026, a projection that assumes the conflict involving Iran concludes in April. The team also cautions that even if geopolitical tensions ease, a return of oil markets to more normal pricing patterns may not be immediate and could require time to play out.
Bank of America links the outlook for the yen to these commodity price dynamics. The bank argues that the full effects of higher oil prices on foreign exchange supply-demand relationships are still forthcoming and have not yet been fully reflected in currency markets. In their view, that delayed impact should be supportive of commodity currencies relative to the yen.
The report also highlights how market volatility and policy paths influence currency moves. Lower market volatility, the bank notes, tends to be negative for the yen and favorable for higher-beta currencies such as those tied to commodities. At the same time, a reduction in upward pressure on the U.S. dollar diminishes both the impetus for and the risk of foreign exchange intervention by authorities.
Bank of America furthermore points to uncertainty around the Bank of Japan's prospects for raising interest rates, especially as other central banks have shifted toward more hawkish stances. That uncertainty contributes to a view that the yen may weaken against commodity-linked currencies.
Finally, the bank observes that if geopolitical tensions subside, a reversal of the broad dollar-strength trend would be likely, which in turn would remove a tailwind for the yen and could further support currencies like the Australian dollar against the Japanese currency.