The foreign exchange market is constantly looking for signals from Japan, especially the trend of the yen that impacts global investment decisions. I recently noticed that the movement of the yen has become more interesting, particularly when looking at the trend chart of the yen over the past period.

The yen is a highly significant currency in the foreign exchange market, with a trading volume ranking fifth in the world. It also serves as a safe-haven asset for global investors, making yen trend analysis quite complex due to Japan's policies differing from other major economies.

The main factors determining the yen's trend include several aspects. First is the monetary policy of the Bank of Japan, where setting interest rates and implementing yield curve control (YCC) play crucial roles. When the Bank of Japan purchases long-term bonds to suppress yields, it causes the yen to weaken.

Second, monetary policies of other central banks, such as the U.S. and Europe, influence the yen exchange rate. When the U.S. raises interest rates, the dollar appreciates, which rapidly depreciates the yen. Third, economic growth trends, measured by GDP, also affect currency strength. Fourth, the current account balance indicates the level of foreign demand for the currency. Lastly, during global financial market risks, the yen tends to strengthen as a safe-haven asset.

Looking back at the 2025 situation, the yen against the Thai baht has continuously depreciated since early 2021. Over the past decade, it has depreciated by more than 30%, with the most severe decline since 2020. After inflation peaked in 2022-2023, foreign central banks began easing policies, but Japan remained cautious.

In the second quarter of 2025, the Bank of Japan reduced bond purchases from 9 trillion yen to 7.5 trillion yen. This change caused the yen to recover slightly, while the Thai baht was supported by a rebound in tourism and strong regional trade, keeping the yen/THB under pressure.

Looking ahead to 2026, the long-term trend chart of the yen shows that the JPY/THB exchange rate has been in a downtrend since 2012. After falling below 0.2400 in 2023, this pair has attempted to recover but has not maintained upward momentum, mostly trading between 0.2150-0.2250.

If the support at 0.2150 remains and macroeconomic factors align, the yen could gradually strengthen toward 0.2300-0.2400 in 2026. However, if the current base cannot be maintained, the yen may test new lows below 0.2100, especially if Japan continues easing policies.

Three key factors to closely monitor in 2026 are: first, global inflation and interest rate differentials, as major central banks may adopt more neutral easing measures. If the Fed cuts rates while Japan maintains tight policies, this differential could support a stronger yen.

Second, Japan's monetary policy outlook is closely watched by investors. Signals from the Bank of Japan about exiting aggressive easing, ending negative interest rates, or adjusting YCC could significantly support the yen, but timing remains critical.

Third, capital repatriation and geopolitical tensions. Japanese institutional investors might move funds back home amid uncertainty. Increased capital inflows often support the yen. Additionally, regional geopolitical conflicts could boost demand for the yen as a regional safe-haven asset.

Regarding current technical indicators, the hourly chart of JPY/THB shows sell signals. Although 7 out of 13 technical indicators signal "sell," moving averages remain neutral, indicating no clear short-term trend. However, downward pressure could suggest a potential reversal if market sentiment shifts.

In summary, the yen's trend in 2026 mainly depends on the Bank of Japan's policy actions. 2025 could be a pivotal year, but the effects of those decisions will become clearer in 2026. Traders and investors should closely follow macroeconomic developments, as yen movements impact many assets, from the dollar and bonds to the Japanese stock market.