UBS Cuts EUR/USD to 1.12, Sees USD/JPY at 165 and Trims AI Exposure
UBS•UBS lowered its end-2026 EUR/USD forecast to 1.12, sees USD/JPY at 165 by year-end and cut its AUD/USD target to 0.68 on stronger Fed rate outlook. It trimmed AI semiconductor and hardware weighting from 76% to 61% while boosting defensive AI exposure to 20%.
1. Revised FX Forecasts
UBS raised its dollar outlook, reducing its end-2026 EUR/USD forecast to 1.12 from 1.14 and projecting USD/JPY at 165 by year-end, while trimming AUD/USD to 0.68. The bank expects the U.S. Dollar Index to test 102, sees EUR/GBP strengthening toward 0.85 and anticipates near-term Swiss franc weakness before a later recovery.
2. AI Portfolio Rebalance
UBS trimmed its AI semiconductor and hardware weighting from 76% to 61% following profit-taking in optics, substrates and cooling names, and raised defensive AI exposure to about 20%, focusing on data center, telecom and payments segments. It maintains a 20–25 point overweight to semis versus the Nasdaq 100 and cautions that further hyperscaler share declines could pressure future capex commitments.
