Understanding the Yen Trend in the Next Two Years 2025-2026

The Japanese Yen is a highly important indicator in the global foreign exchange market. Yen trends influence investment decisions worldwide. However, the Japanese Yen is not only a currency for trading with Japan but also serves as a safe-haven asset for investors around the globe during times of market uncertainty.

Key Factors Driving Yen Fluctuations

Japan remains a major economy, expected to have a GDP of approximately $4.19 trillion in 2025, making it the 5th largest economy in the world. This significance makes Yen trends important to many international investors.

The main factors affecting the Yen are complex and diverse, including Japan’s monetary policy, interest rate comparisons with other countries, global financial geography, and systemic risks in international finance.

Major Indicators: Central Bank Policies and Inflation Rates

Bank of Japan’s Interest Rate Policy

The Bank of Japan continues to maintain a very accommodative monetary policy, keeping the policy rate at -0.1%. Meanwhile, the Yield Curve Control (YCC) policy remains in place, differing from other central banks’ quantitative easing (QE) measures.

YCC involves the BOJ purchasing long-term government bonds to keep yields within a set range, injecting liquidity into the financial system and tending to weaken the Yen.

Differences Among Major Central Banks

While Japan maintains an easing stance, the Federal Reserve and the European Central Bank have shifted policies after global inflation surged in 2022-2023. The Fed’s rate hikes have made dollar yields more attractive, prompting investors to move funds out of Yen in search of higher returns elsewhere.

Japan’s Inflation Situation

Inflation in Japan is projected to be between 2.5% and 3.5% in early 2025, above the BOJ’s 2% target. Despite this, the BOJ remains cautious in easing monetary policy further.

Yen to Baht Situation: 2025–2026

Current Conditions and Long-Term Trends

The JPY/THB exchange rate has been in a steady downtrend since its peak in 2012. Over the past decade, the Yen has depreciated over 30%, especially after 2020.

In 2024–2025, the pair trades between 0.2150 and 0.2250, indicating a tentative recovery from past support levels. However, a strong upward momentum has yet to develop.

Currently, the pair trades at 0.2176 Baht per Yen, slightly above the support at 0.2150. This movement reflects a technical rebound after the BOJ reduced its monthly bond purchases from 9 trillion Yen to 7.5 trillion Yen in Q2 2025.

Forecast for Late 2025

If the BOJ cautiously exits YCC and inflation remains firm, Yen could strengthen toward 0.2250–0.2300 by the end of 2025.

Meanwhile, Thailand benefits from a tourism rebound, regional trade strength, and foreign investment inflows, supporting the Baht’s stability. These factors keep the Yen/THB under pressure.

However, if the BOJ does not decisively raise interest rates, the possibility of testing new historic lows below 0.2100 remains.

2026 Outlook

Based on long-term charts, if the support at 0.2150 holds and macroeconomic factors align, Yen could gradually strengthen toward 0.2300–0.2400 in 2026.

Conversely, failure to maintain current support could lead to testing new lows below 0.2100, especially if Japan continues easing while Thailand benefits from regional growth.

Key Indicators for Traders in 2026

Indicator 1: Interest Rate Differentials and Inflation Signals

As global inflation pressures stabilize, the Fed and ECB are expected to shift toward more neutral easing policies. If the Fed cuts rates further while Japan gradually tightens, the interest differential could favor the Yen.

However, if the BOJ delays tightening, Yen may remain under downward pressure.

Indicator 2: Japan’s Policy Signals and Actions

The BOJ has signaled potential exit from aggressive easing. Concrete steps, such as ending negative rates or adjusting YCC, could strengthen the Yen. Timing is crucial; slow implementation may limit a significant rebound.

Indicator 3: Capital Flows and Geopolitical Risks

Japanese institutional investors might repatriate funds amid rising uncertainties in emerging markets, supporting the Yen. Additionally, geopolitical tensions in Asia could increase demand for Yen as a regional safe-haven asset.

Overall Analysis and Investment Recommendations

Current Technical Outlook

The hourly chart of JPY/THB shows mixed signals with a slight bearish bias. Out of 13 indicators, 7 signal “sell,” 1 signals “buy,” and 5 are neutral, indicating no clear short-term trend.

Moving averages are evenly split, with 6 buy signals and 6 sell signals, suggesting a slight bearish bias.

Investor Guidance

Investors should be cautious when Yen shows excessive sell signals, but long-term support levels may hint at potential reversals if market sentiment shifts.

The main risk lies in BOJ policy missteps or rising inflation in Thailand and the region, which could keep Yen under pressure.

Conversely, rapid changes in macroeconomic conditions could benefit the Yen as a safe-haven asset. Investors should monitor key economic data such as Japan’s GDP, employment figures, and BOJ policy announcements.

Summary

Yen trends in 2025–2026 depend on changes in BOJ monetary policy and interest rate differentials relative to other economies. 2025 could be a pivotal year, especially if it prompts shifts in Japan’s monetary stance. Yen movements will likely reflect credible monetary policy signals from the BOJ.

Investors should consider both technical and macroeconomic factors to gain a comprehensive view of Yen’s near-term outlook.