Category: USD/JPY

  • Japanese yen eyes wage data

    Japanese yen eyes wage data


    The yen has edged higher on Wednesday. In the European session, USD/JPY is trading at 158.33, up 0.19% on the day.

    Japan’s consumer confidence for December data showed a slight decline, falling to 36.2 from 36.4 in November. This missed the market estimate of 36.4 as consumers remain in a pessimistic mood about economic conditions.

    Japan’s wage growth expected to rise

    Japan will release wage growth early on Thursday and Bank of Japan policy makers will be watching carefully. The market estimate for November stands at 2.7%, up from 2.6% a month earlier. Governor Ueda has repeatedly said that he won’t raise rates before wage growth approaches a level consistent with  2% inflation. Ueda has been mum about a time frame and the BoJ is hesitant to telegraph its rate plans ahead of time, in order to ward off yen speculators. This leaves investors with a great deal of uncertainty with  regard to the timing of a rate hike. The BoJ meets next on Jan. 23-24 and could announce a rate hike, or remain on the sidelines until March or even later.

    The BoJ is also concerned about the yen’s rapid descent. The Japanese currency plunged 10.3% against the dollar in 2024 and could face further headwinds, including an incoming Trump administration that has pledged trade tariffs. The government intervened in the currency markets last July after the yen fell to 160 against the dollar and the yen is closing in on that level.

    The US posted strong data on Tuesday. The ISM Services PMI rose to 54.1 in December, up from 52.1 and above the market estimate of 53.3. JOLT Job Openings jumped to 8.09 million in November and 7.8 million in October. The market is looking ahead to Friday’s nonfarm payrolls, which is expected to drop to 154 thousand, compared to 227 thousand in November.

    USD/JPY Technical

    • USD/JPY tested support at 157.96 earlier. Next, there is support at 157.49
    • There is resistance at 158.54 and 159.01

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  • USD/JPY Price Analysis: Yen Recovers as Intervention Fears Rise


    • Japan’s Finance Minister, Katsunobu Kato, warned traders against selling the yen.
    • The USD/JPY pair is quickly approaching the pivotal 160.00 level.
    • This week, the US will release its crucial nonfarm payrolls report.

    The USD/JPY price analysis shows some relief for the yen amid renewed warnings against excessive declines. Japan’s top officials are becoming increasingly concerned about the weak yen. On the other hand, the dollar was vulnerable as the market digested recent reports that Trump might go easy on tariffs.

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    On Tuesday, Japan’s Finance Minister Katsunobu Kato warned traders against selling the yen. He emphasized that the government would take appropriate action to respond to excessive currency declines. 

    The USD/JPY pair is quickly approaching the 160.00 level, prompting Japan to intervene last year. Therefore, market participants might be cautious since an intervention could momentarily reverse the trend. However, fundamentals point to further weakness for Japan’s currency, especially if the BoJ fails to hike interest rates soon. 

    Notably, the dollar has a bright future under Trump’s administration. At the same time, the Federal Reserve is planning to reduce interest rates in 2025 gradually. Therefore, the gap in interest rates between Japan and the US will remain wide. 

    Meanwhile, market participants will pay close attention to US data for more clues on Fed rate cuts. This week, the US will release its crucial nonfarm payrolls report. An upbeat report will further boost the dollar, while a downbeat report will increase Fed rate cut bets, hurting the greenback.

    USD/JPY key events today

    • US ISM services PMI
    • US JOLTS job openings

    USD/JPY technical price analysis: Bullish momentum wanes

    USD/JPY price analysisUSD/JPY price analysis
    USD/JPY 4-hour chart

    On the technical side, the USD/JPY price has attempted to breach the 158.02 resistance level again. However, it has pulled back below and is about to retest the 30-SMA support. Bulls are struggling to resume the previous trend. However, the bullish momentum is fading. The last trend peaked when the price met the 158.02 support level. Since then, it has remained in consolidation, with support at 156.03 and resistance at 158.02. 

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    At the same time, while the price has made a higher high, the RSI has made a lower one, indicating a bearish divergence. Therefore, bears might be ready to take charge. If this happens, the price will break below the 30-SMA and the 156.03 range support level.

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