Recently, I’ve been looking at the Japanese yen exchange rate data and found that the fluctuations over these years are quite interesting. Since Prime Minister Abe took office in 2012 and implemented economic stimulus policies, the yen has been in a long-term depreciation trend. The goal at that time was clear: support exports through monetary easing, resulting in the yen dropping from the psychological level of 100 all the way down to 80 in 2015.

But this trend didn’t continue indefinitely. In 2016, global economic uncertainty increased, risk aversion rose, and the yen, as a safe-haven currency, began to appreciate again. From 2018 to mid-2021, the monetary policies of the U.S. and Japan were basically synchronized, and the yen remained relatively stable. However, starting in the second half of 2021, the situation reversed again. The Federal Reserve raised interest rates, while the Bank of Japan maintained low interest rates, leading to a policy divergence that caused the yen to depreciate sharply once more, reaching a 34-year low by April 2024.

Looking at the USD/JPY currency pair, its performance has been on an upward trend since 2022. In March 2022, the Fed began aggressive rate hikes to combat inflation, while the Bank of Japan kept its negative interest rate policy, making the interest rate differential the main driver of yen depreciation. By October 2022, USD/JPY surged to 151.94, hitting the highest level since April 1990. Although there was some pullback later, the overall trend remained upward.

Regarding yen prediction, there are different views in the market. Some technical analysis firms forecast USD/JPY will fluctuate between 151 and 175 in 2024, possibly rising to 176-186 in 2025, and even reaching 192-211 in 2026. But predictions from major international banks are more conservative, believing the yen has room for a rebound, expecting USD/JPY to return to the 138-140 range by the end of the year.

From a fundamental perspective, Japan’s economy is indeed under pressure. In Q4 2023, Japan’s GDP contracted by 0.1% quarter-on-quarter and decreased by 0.4% year-on-year, even surpassing Germany to become the third-largest economy in the world. This economic weakness, combined with the cautious stance of the Bank of Japan, has put downward pressure on the yen.

If you want to participate in yen-related trading, you need to consider both fundamentals and technicals. On the fundamental side, focus on Japan’s GDP, inflation data, employment figures, and closely monitor the Bank of Japan’s interest rate decisions. On the technical side, look at indicators like moving averages, MACD, and RSI. For example, USD/JPY on the weekly chart is in an upward channel, with MACD in positive territory and trending upward, indicating the bullish trend is still ongoing.

However, it’s important to note that the outlook for the yen in 2024 and beyond carries significant uncertainty. U.S. employment data, shifts in BOJ policy, geopolitical risks—any of these factors could change the exchange rate trajectory. Instead of blindly chasing highs, it’s better to wait for clearer signals. Recently, the BOJ has been considering policy adjustments, and the U.S.-Japan interest rate differential is narrowing, which might give the yen some breathing room. The key is to stay flexible and adjust strategies accordingly, rather than stubbornly sticking to one position.