Will the yen rise? Analyze the trend after the end of 2025 and the opportunities in 2026

As 2025 approaches the end of the year, investors still focus on the key question: Will the yen appreciate? Because movements in the yen exchange rate not only impact the Japanese market but also reflect the global market balance, major central banks, and the overall world economy. The USD/JPY (or JPY/THB) pair, serving as a bridge between Japan and Thailand’s economies, has become an important indicator that traders and investors closely monitor.

Yen Outlook for 2025: Approaching Historic Lows

Throughout 2025, the yen remains unfavorable against the Thai baht. The JPY/THB exchange rate trades at around 0.2176 baht per yen, slightly above the hard support level of 0.2150. Despite a temporary mini recovery after the Bank of Japan (BoJ) announced a reduction in its monthly bond purchases from 9 trillion yen to 7.5 trillion yen in Q2, downward pressure on the yen persists.

In reality, the yen has depreciated over 30% in the past decade, especially since 2020. The main reason is the stark difference in monetary policies: while the US Federal Reserve (Fed) and the European Central Bank (ECB) raised interest rates to combat soaring inflation in 2022-2023, Japan maintained an accommodative monetary stance, even with inflation reaching 2.5% to 3.5%.

Japan’s Policy Shift – BoJ Changing Course

One sign indicating that the yen may strengthen in the future is the gradual change in BoJ’s stance. In 2025, the BoJ aims to exit its Yield Curve Control (YCC) policy, which involves purchasing long-term government bonds to keep yields low. This policy has been the most aggressive form of monetary easing.

While BoJ’s policy rate remains at -0.1%, the sentiment is shifting as the central bank observes signs of a more robust Japanese economy. If concrete actions are taken in the remaining quarters, it could serve as a catalyst for the yen to rebound.

Key Factors Influencing Yen’s Direction

The outlook for the JPY/THB pair in 2026 depends on five main factors:

First: Interest Rate Differentials
If Japan’s interest rates rise and US rates fall, capital will flow back into these countries, supporting the yen. The key question is how much the Fed will cut rates in 2026 and how quickly the BoJ can normalize its monetary policy.

Second: Japanese Capital Flows
Institutional investors in Japan may repatriate funds in 2026 amid uncertainties in emerging markets and global political events. Increased inward investment will boost demand for the yen.

Third: Macroeconomic Conditions
Japan is expected to remain in the top 4 or 5 largest economies. Stronger economic growth, indicated by GDP figures or manufacturing orders, will exert upward pressure on the yen.

Fourth: Japan’s Current Account Balance
A surplus indicates strong demand for the currency, supporting yen appreciation. Conversely, a deficit would put downward pressure on the yen.

Fifth: Global Market Risks
The yen remains a safe-haven currency. During geopolitical conflicts or financial crises, investors tend to buy yen as a risk hedge.

Looking Ahead: Will the Yen Recover in 2026 or Remain Low?

Based on overall analysis, the long-term trend of the JPY/THB pair remains bearish since peaking in 2012. Chart-wise, the pair has broken through multiple support levels and is now near its lowest point around 0.2100.

If BoJ continues easing policies until the end of 2026 and Thailand benefits from a tourism rebound, capital inflows, and regional economic strength, the yen could fall below 0.2100.

Conversely, if the BoJ implements significant tightening measures early in 2026—such as ending negative rates or raising interest rates, and fully exiting YCC—the yen could rally to 0.2250–0.2400, especially if inflation and employment data remain strong.

Technical Signals and Risks for Traders

Hourly chart analysis of JPY/THB using 13 technical indicators shows 7 signals “sell,” 1 “buy,” and 5 “neutral.” Moving averages are evenly split: 6 signals “buy” and 6 “sell.”

This suggests that in the short term, market sentiment leans bearish, with more technical indicators indicating selling pressure.

However, since the pair is near the long-term support at 0.2150, a technical bounce could occur if market sentiment shifts.

Summary and Trader Outlook

The question Will the yen rise? has no definitive answer for 2026; it largely depends on the volatility of Japan’s monetary policy. If BoJ makes clear, concrete policy changes, the yen is likely to strengthen. If not, it may remain at low levels or test new lows.

Monitoring policy announcements from Japan, interest rate differentials, and capital flows between countries is crucial for predicting the pair’s trend in the coming years.