Yen Trend Forecast 2025-2026: Perspectives from Economic and Technical Factors

The Importance of Monitoring the Yen Exchange Rate Trends

Yen exchange rate trends are a key indicator that institutional and retail investors must continuously follow. Since the yen is one of the most actively traded currencies in the world, ranking 5th globally, and is considered a safe-haven asset that investors turn to during market uncertainties, Japan—being the world’s 4th largest economy with an estimated GDP of approximately $4.19 trillion in 2025—has policies and economic conditions that significantly impact related sub-markets.

Factors Driving Yen Exchange Rate Trends

Bank of Japan’s monetary policy

The Bank of Japan employs unique monetary tools compared to other central banks, especially the (Yield Curve Control) policy, which involves purchasing long-term government bonds to keep yields within a set range. This policy promotes liquidity circulation in the system and often results in a weaker currency.

Differences in international monetary policies

While the US Federal Reserve and the European Central Bank have begun to cut interest rates and ease monetary measures, Japan remains cautious in adjusting its policies. The divergence in interest rate developments (interest rate differential) influences exchange rate movements.

Macroeconomic indicators

GDP growth increases demand for the currency and can lead to appreciation. Conversely, economic slowdown tends to weaken the currency. A current account surplus indicates strong currency demand, while a deficit suggests downward pressure on the currency.

Changes in capital flows

During risk-off market periods, investors tend to flee to safe assets, strengthening the yen. Additionally, repatriation of funds by Japanese investors also positively impacts the yen’s recovery.

Yen Outlook against Thai Baht in 2025

In 2025, the JPY/THB exchange rate is at 0.2176 baht per yen, slightly above the support level of 0.2150. The yen has depreciated over 30% in the past decade, especially since 2020, which saw the most severe depreciation.

Following the global inflation peak in 2022-2023, major central banks began easing policies, but Japan remains cautious. Despite inflation in Japan reaching 2.5-3.5% in early 2025—exceeding the Bank of Japan’s 2% target—interest rates remain at -0.1%, and yield curve control continues.

Positive signals for the yen include the Bank of Japan reducing bond purchases in Q2 from 9 trillion yen to 7.5 trillion yen. This led to a rebound from 0.2130 to 0.2176, indicating a technical bounce from long-term support levels.

In the Thai Baht, the currency is supported by recovering tourism, strong regional trade, and real interest rates, which exert additional pressure on the yen against the baht.

If the Bank of Japan continues to unwind YCC cautiously and inflation remains high, the yen could recover to around 0.2250-0.2300 by late 2025. However, without decisive measures, the yen may end at a new lower low.

Forward Outlook: Yen Trends in 2026

Looking at the long-term chart, the JPY/THB exchange rate has shown a continuous downtrend since 2012 but is attempting to recover within the key support zone of 0.2150-0.2250.

Key factors to watch

Inflation and interest rates: As global inflation pressures ease, central banks may adopt more neutral policies. If the Fed continues rate cuts while Japan maintains tight policies, this divergence could strengthen the yen. Conversely, if Japan delays policy changes, the yen may remain weak.

Japanese monetary policy: Concrete moves such as ending negative interest rates or adjusting YCC could bolster the yen. Timing and consistency of these actions are crucial.

Capital flows: Japanese investors might repatriate funds in 2026 amid uncertainties. Geopolitical tensions in Asia could also increase demand for the yen as a safe-haven asset.

Forecast for 2026

If the support at 0.2150 holds and macroeconomic factors align, the yen could gradually strengthen toward 0.2300-0.2400 in 2026. Conversely, failure to maintain current levels might lead to testing new lows below 0.2100, especially if Japan continues easing policies.

Technical Analysis: Current Signals

Based on 13 indicators on the hourly chart, 7 signal “sell,” 1 signals “buy,” and 5 are neutral. Moving averages remain neutral, with 6 “buy” and 6 “sell” signals, indicating no clear short-term trend.

Although most technical indicators point downward, long-term support levels may suggest potential reversals. Traders should consider that despite downward pressure, buying interest at current levels could emerge.

Summary

Yen exchange rate outlook for 2025-2026 depends on the balance between the Bank of Japan’s monetary policy, interest rate differentials with other countries, and global market risk sentiment. 2025 could be a pivotal year for Japan’s shift toward tighter monetary policy, presenting opportunities for traders and investors closely monitoring these developments.