There's an interesting story about the yen trend that I want to share with everyone because it affects our currency markets and investments all around.

The Japanese yen is not just an ordinary currency. It is one of the five most traded currencies in the world and is also considered a safe asset during turbulent market times. Japan is the fifth-largest economy in the world, so understanding the yen's trend is crucial.

The main factors driving the yen's trend are several. First, the policies of the Bank of Japan, especially regarding interest rates and yield curve control (YCC), which differ from the easing policies of the U.S. Federal Reserve and the European Central Bank. Changes in monetary policy in other countries significantly impact the yen. When the dollar strengthens, the yen tends to weaken.

Economic growth (GDP) and the current account balance are also key variables. Countries with strong growth usually have stronger currencies, while those with economic downturns see their currencies weaken. Additionally, during global crises, the yen often appreciates because it is viewed as a safe asset.

Let's look at what happened in 2025. The JPY/THB pair traded at about 0.2176 baht per yen, slightly above the long-term support at 0.2150. Over the past ten years, the yen has depreciated by more than 30%, especially after 2020 when global inflation surged. Central banks worldwide, including the U.S. and Europe, began easing monetary policies, but Japan remained cautious.

Although Japan's inflation ranged between 2.5-3.5%, higher than the Bank of Japan's 2% target, they continued with relatively tight policies. The policy interest rate was at -0.1%, and yield curve control was still in place. However, when the Bank of Japan reduced bond purchases from 9 trillion yen to 7.5 trillion yen in Q2 2025, the yen started to recover, strengthening the pair from 0.2130 to 0.2176.

The Thai baht remained stable due to a recovery in tourism, strong regional trade, and interest rates attracting foreign capital. Therefore, the yen-to-baht trend continues to face downward pressure.

Looking ahead, if the Bank of Japan continues to cautiously exit YCC and inflation remains high, the yen could rebound to 0.2250-0.2300 by the end of 2025. But without prudent measures, the yen might test new lows. 2025 could be a transitional year for the yen trend, but it will depend on credible monetary tightening.

For 2026, our long-term analysis shows that the JPY/THB has been in a downtrend since its peak in 2012. After falling below 0.2400 in 2023, the pair attempted to recover but couldn't sustain momentum. During 2024-2025, it mostly traded between 0.2150 and 0.2250.

If the support at 0.2150 holds and macroeconomic factors support it, the yen could gradually strengthen toward 0.2300-0.2400 in 2026. But if the current base cannot be maintained, the yen might test new lows below 0.2100, especially if Japan continues easing while Thailand benefits from regional growth.

Key factors to watch in 2026 include three. First, the differences in inflation and interest rates between countries. If the Fed continues to cut rates while Japan tightens policies, this spread could support a stronger yen. Second, Japan's monetary policy trajectory—ending negative rates or adjusting YCC could bolster the yen, but timing and pace are critical. Third, capital repatriation and geopolitical tensions—Japanese investors might send money home amid uncertainty, and conflicts in Asia could increase demand for the yen as a safe asset.

In the short-term view, most technical indicators point to selling pressure. Out of 13 indicators, 7 signal a sell, only 1 signals a buy, and 5 are neutral. Moving averages are neutral, with 6 buy signals and 6 sell signals, indicating no clear trend. However, the bearish technical signals suggest downward pressure, implying a slight short-term downtrend. Traders should be cautious. Although the current trend is negative, excessive sell signals and long-term support levels could hint at a potential reversal.

Overall, the yen trend is a critical factor for investors to monitor closely because it links to many other assets, including the dollar, bonds, and the Japanese stock market. 2026 could be a pivotal year for Japan's monetary policy and a significant opportunity for traders and investors.