Should You Buy Yen Now? A Complete USD/JPY Trading Guide for 2024-2026

The Japanese Yen stands at a critical crossroads in 2024. After depreciating to its weakest level in 34 years, traders worldwide are asking the same question: should I buy yen now, or wait for better entry points? This guide breaks down what’s really happening with JPY currency pairs and how to decide if now is the right time to jump in.

The Real Story Behind Yen Weakness: What You Need to Know

The USD/JPY pair has been on an unstoppable rally since early 2022, and the numbers tell a compelling story. By July 2024, the rate hit 161.90—a level not seen since January 1990. Currently hovering around 154.00-155.50, the yen continues its downward spiral against the dollar.

Why? The answer lies in a simple but powerful dynamic: interest rate divergence. While the Federal Reserve aggressively hiked rates to combat inflation starting in 2022, Japan’s Bank of Japan (BOJ) maintained its ultra-loose monetary policy. This massive yield gap created a one-way trade—investors dumped yen-denominated assets and rushed into dollar investments.

The BOJ’s March 2024 decision to finally exit negative rates offered a glimmer of hope for yen buyers. But here’s the catch: it wasn’t enough to reverse the trend. Even after policy adjustments and multiple government interventions in the forex market, USD/JPY kept climbing.

Decoding the Technical Setup: Is the Rally Running Out of Steam?

Here’s what traders need to watch on the USD/JPY charts:

The Bullish Picture:

• USD/JPY is clearly in an ascending channel on weekly timeframes, signaling continued upward pressure
• The MACD indicator remains in positive territory with upward-pointing lines, confirming strong bullish momentum
• The 50-day moving average sits comfortably above the 100-day MA—textbook bullish alignment
• 161.90 (July peak) and 154.00 (current support) are the key levels; a break below 154 could signal a trend shift

The Warning Signs:

• RSI readings are flirting with overbought territory (above 70), suggesting the move may be overextended
• Japan’s 2023 GDP actually contracted—Q4 fell 0.1% quarter-on-quarter and 0.4% year-on-year. The country dropped from world’s third-largest economy to fourth, behind Germany
• Unemployment concerns and weaker-than-expected economic data could spark a sharp reversal

Should I Buy Yen Now? The Fundamental Reality Check

This is where traders must be brutally honest with themselves. Buying yen at current levels means betting against the fundamental backdrop.

Japan’s economic picture looks foggy at best:

• Technical recession in late 2023
• GDP stuck in negative territory
• Persistent inflation pressures
• Demographic headwinds
• Massive public debt load

Meanwhile, the U.S. labor market remains resilient despite rate hikes, and the Fed still signals hawkishness compared to the BOJ.

That said, the window for yen recovery isn’t permanently closed. Banks worldwide still expect the pair to eventually correct—ING forecasts USD/JPY at 138 by end-2024 and 140-142 in 2025, while Bank of America sees movement toward 136-147 by 2025. These predictions suggest a potential 10-15% pullback from current levels.

The trigger? Watch for:

• A U.S. economic slowdown or shock
• More aggressive BOJ tightening than markets expect
• A significant rise in Japanese unemployment
• Geopolitical risk-off events that restore safe-haven demand for yen

How to Trade JPY Currency Pairs Right Now

Rather than gambling on direction alone, consider the tools modern traders use:

Technical Analysis Framework:

• Break below 154.00 with volume = potential entry for yen strength
• Resistance cluster at 156-158 = potential short opportunity
• 50-day/100-day MA crossover = directional confirmation signal
• RSI divergence = early warning of trend exhaustion

Fundamental Tracking: Monitor BOJ meeting decisions like a hawk. The next rate move is critical. Track U.S. employment data weekly—strong jobs reports support dollar strength, weak ones could trigger rapid yen buying. Watch Japan’s trade balance and inflation prints; improving numbers create room for more BOJ tightening, supporting yen recovery.

Currency Correlations Matter: The yen tends to strengthen when EUR/JPY, AUD/JPY, and other commodity-linked pairs weaken. If these pairs are rolling over, watch for USD/JPY confirmation—it might signal a broader yen recovery cycle beginning.

The 2024-2026 Forecast Debate: What the Experts Actually Say

The forecasts are all over the map:

The Bullish Case (Longforecast):

• USD/JPY: 151-175 in 2024, climbing to 176-186 in 2025, and 192-211 by 2026
• This assumes continued U.S. rate advantage and Japanese weakness

The Balanced View (Major Banks):

• ING: 138 by end-2024, stabilizing at 140-142 in 2025
• Bank of America: 160 in 2024, correcting to 136-147 in 2025
• These forecasts price in eventual yen recovery

The truth? Markets are bipolar right now. Short-term momentum favors the dollar. Long-term logic suggests the yen is oversold.

Should I Buy Yen Now? The Trader’s Decision Framework

Buy yen if:

• USD/JPY breaks below 150 with conviction
• BOJ signals faster rate hikes than expected
• U.S. economic data deteriorates
• You see RSI divergence on 4-hour or daily charts
• Geopolitical risks spike (flight to safety)

Avoid buying yen if:

• You can’t stomach 10-15% drawdowns (current setup is volatile)
• You need certainty—there’s none right now
• You’re fighting the technical trend without a solid plan
• You haven’t done your homework on BOJ/Fed calendars

The Middle Ground (Best for Most Traders): Use CFD instruments with manageable leverage. This lets you capture moves without overexposing yourself. Set stops at 152.00 (for yen longs) and 158.00 (for dollar longs). Take profits on technical signals, not emotion. Dollar pairs are liquid—you can enter and exit cleanly.

Risk Management: The Real Edge

Here’s what separates winners from losers in yen trading right now:

Position sizing matters more than direction. USD/JPY can swing 200-300 pips in a single session. Size accordingly.

Use correlation analysis. If you’re long yen via USD/JPY, check where EUR/JPY and commodity-linked pairs are trading. Divergences often precede trend changes.

Watch the calendar obsessively. BOJ decisions, Fed speakers, U.S. labor data, and Japanese economic reports can trigger 1-2% daily moves.

Don’t try to catch the exact bottom or top. Even if you get it wrong by 3-5 pips, proper exits will keep you profitable.

The Bottom Line: Should You Buy Yen Now?

The honest answer: it depends on your timeframe and risk appetite.

Short-term traders should respect the uptrend until technical signals break. The ascending channel remains intact, and 154.00 is holding as support. A breach could finally crack the bullish setup.

Medium-term traders face a dilemma. Fundamental weakness in Japan suggests yen recovery eventually, but “eventually” could mean 2025 or 2026. Fighting the trend for months will drain your account.

Long-term investors should watch for the BOJ to deliver 2-3 more rate hikes without U.S. recession fears spiking. That combination could finally restore yen appeal.

Whatever you decide, remember this: the yen is at a 34-year low. History suggests extremes eventually reverse. The only question is timing. Use technical analysis, fundamental data, and risk management to find your edge—and stick to it religiously. The markets don’t care about your opinion, only about price action and positioning.