Last month, I noticed an interesting movement in the yen compared to the baht, which is a topic closely followed by investors in the region. The yen remains an important currency in the global market, whether in trade with Japan, the world's fourth-largest economy, or as a safe-haven asset during tense market conditions.

Looking at the trend of the yen from 2025 to 2026, it shows significant changes. The main factor driving this trend is Japan's central bank policy, especially the reduction of monthly bond purchases from 9 trillion yen to 7.5 trillion yen in the second quarter of 2025, which caused the yen to recover from 0.2130 to 0.2176 baht per yen.

The key point to watch is the difference in interest rates between Japan and other countries. The U.S. Federal Reserve and the European Central Bank are beginning to ease their policies, while Japan remains cautious despite inflation being at 2.5-3.5%, above the central bank's 2% target. This divergence is a crucial factor that will determine the future trend of the yen.

Based on long-term technical analysis, the yen against the baht has been in a continuous downtrend since 2012. Over the past decade, the yen has depreciated by more than 30% due to Japan's easing policies. However, it now appears to be approaching its historic low of 0.2150.

If the Bank of Japan significantly abandons the YCC and inflation remains high, the yen could rebound to the 0.2250-0.2300 range by the end of 2025. But if they delay tightening measures, the yen might test new lows below 0.2100.

Looking ahead to 2026, I see that the yen's outlook will depend on three main factors. First is the movement of global interest rates. If the Fed continues to cut rates while Japan tightens its policy, this divergence could strengthen the yen. Second is the tangible steps Japan takes to exit easing policies; if they seriously move toward ending negative interest rates, that would be a strong signal for yen appreciation.

Third is the flow of capital. Japanese investors might repatriate funds in 2026 amid uncertainties in emerging markets. Such capital flows often support the yen. Additionally, geopolitical tensions in Asia could increase demand for the yen as a regional safe-haven asset.

From a technical perspective, short-term sell signals outweigh buy signals, but the long-term support level at 0.2150 remains strong. If the yen can hold this level, it may gradually strengthen toward 0.2300-0.2400 in 2026. However, if it cannot defend this support, we might see a test of new lows below 0.2100.

In summary, 2026 could be a transitional year for the yen. Everything depends on the Bank of Japan's policy direction and how interest rate differentials evolve. Investors monitoring the yen's trend should closely watch policy signals, as even small changes could significantly impact other markets.