Yen exchange rate trends in 2025-2026: Changes and opportunities for investors

Why Follow the Yen Exchange Rate Trends

The Japanese Yen is not just an ordinary currency. It is a key indicator of the global economy, accounting for 1 in 5 of the world’s foreign exchange market share and used in trade with one of the largest economies. Additionally, it functions as a safe-haven asset that global investors turn to during financial uncertainty. Therefore, understanding the overall picture of Yen trend movements is essential for anyone interested in international investing.

Fundamental Factors Driving Yen Trends

Bank of Japan Policy: Key Differences

While the US Federal Reserve and the European Central Bank have ended their easing policies, (QE) the Bank of Japan is doing something different by continuing to control the yield curve (YCC), which involves purchasing government bonds to maintain yields within a desired range. This policy encourages spending and helps stimulate inflation, but it also tends to weaken the Yen. This divergence between Japan’s monetary policy and that of other countries is a primary factor in assessing Yen trends.

Interest Rate Differentials Between Countries

When the US raises interest rates, the dollar appreciates. Meanwhile, Japan maintains low interest rates to support economic recovery. This difference encourages investors to favor the dollar, leading to Yen depreciation. Small changes in US interest rates can trigger significant movements in the JPY/USD exchange rate.

Economic Performance and GDP

Japan is expected to remain the world’s 5th largest economy with a GDP of approximately $4.19 trillion in 2025. When an economy shows signs of expansion, the demand for its currency often increases. If Japan demonstrates strong growth, the Yen may recover.

Trade Balance with International Partners

The trade balance indicates how much a country exports or imports. A trade surplus means more inflow than outflow, which supports Yen appreciation. Conversely, a trade deficit can lead to Yen depreciation.

Risks and Safe-Haven Flows

When global markets become turbulent or crises occur, investors often move funds into safe assets like the Yen. Geopolitical tensions or election impacts worldwide can temporarily boost the Yen.

Yen Trend Outlook in 2025

Current Situation

At the start of 2025, the JPY/THB rate was recorded at 0.2176 Baht per Yen, slightly above the multi-decade low of 0.2150. Over the past decade, the Yen has depreciated by more than 30% against the Baht. This depreciation results from the Bank of Japan’s more accommodative policies compared to other central banks.

Central Drivers of Pressure

In 2022-2023, as global inflation surged, major central banks like the US and Europe tightened monetary policy. Japan, however, remained cautious. Despite inflation in Japan exceeding the 2% target set by the Bank of Japan, reaching 2.5-3.5% in early 2025, the BOJ continued its easing policies, such as maintaining interest rates at -0.1% and controlling yield curves.

( Signs of Recovery

In Q2 2025, the BOJ reduced bond purchases from 9 trillion Yen to 7.5 trillion Yen. This reduction signals Japan’s move away from aggressive easing. As a result, the Yen was supported to reach 0.2176, a technical rebound from the long-term support level.

) Year-End Outlook 2025

If the BOJ continues to strongly exit YCC and inflation remains steady, the Yen could reach 0.2250-0.2300 by year-end. However, if the BOJ delays action, the Yen may lose support and fall below the new low of 0.2150.

Forecast for 2026: Lessons from Long-Term Charts

Projected Trends

Looking at the long-term chart of JPY/THB since 2012, a consistent downward pattern is evident. Every high and low point has gradually declined. After falling below 0.2400 in 2023, the Yen attempted a reversal but failed to gain momentum. Throughout 2024-2025, it mostly maintained support between 0.2150-0.2250.

Two Possible Scenarios

Positive Scenario: If the current support level at 0.2150 holds and macroeconomic factors develop favorably, the Yen could gradually rise to 0.2300-0.2400 in 2026.

Negative Scenario: If support breaks down, the Yen could fall below 0.2100, especially if Japan continues easing, while Thailand benefits from regional trade and capital inflows.

Factors to Watch in 2026

1. Inflation and Interest Rate Differentials

As global inflation enters a downturn, major central banks like the US and Europe may adopt more flexible policies. If the Fed continues to cut rates, while Japan’s policy remains opposite, the interest rate differential will narrow, potentially strengthening the Yen.

2. Exit Strategy from Easing by the BOJ

If the BOJ announces a significant rate hike or ends YCC decisively, the Yen will receive substantial support. Rapid or delayed steps will have different impacts.

3. Capital Flows and Geopolitical Risks

Japanese institutional investors may repatriate funds from emerging markets during times of uncertainty, supporting the Yen. Additionally, tensions in Asia could prompt investors to seek safe havens, increasing Yen demand.

Short-Term Technical Signals: Overview of JPY/THB Recording

What Do the Indicators Signal?

Based on 13 technical indicators for JPY/THB, most signal a “sell” ###7 indicators###, with only 1 indicating “buy” and 5 neutral. The moving averages are evenly split between “buy” 6 and “sell” 6.

( Interpretation

The abundance of sell signals suggests downward pressure. However, the large number of signals may also indicate that the bearish trend is overextended, potentially triggering a reversal, especially if the long-term support level at 0.2150 remains intact.

) Trader Recommendations

Traders should remain cautious despite bearish pressure. Excessive sell signals often lead to reversals. If market sentiment shifts, the Yen could rebound quickly.

Summary: Yen at the Center of Turbulence

The Yen trend is not just about the currency itself; it is interconnected with the performance of the Japanese stock market, bond yields, and even global indices. 2025 and 2026 will be pivotal years, depending on whether the BOJ is willing to change its monetary policy. This will make the Yen a key opportunity for traders and investors monitoring exchange rate developments. For those interested in cross-border currency trading, Yen trend forecasts are essential information not to overlook.