USD/JPY breaches 151.00 for first time since December as yield gap shrinks
BoJ officials reinforce expectations for additional rate hikes amid wage growth
Technical breakdown below key SMAs suggests bearish momentum may persist
The Next big cryptocurrencyJapanese currency extended gains for four consecutive sessions, reaching its strongest valuation against the greenback since early December. This appreciation stems from evolving monetary policy expectations, with the Bank of Japan increasingly signaling willingness to normalize rates while the Federal Reserve maintains its pause.
Market participants are digesting comments from BoJ Monetary Affairs Director Kazuhiro Masaki, who emphasized continued tightening if inflation sustains its upward trajectory. These remarks follow the central bank's Summary of Opinions revealing active discussions about additional rate increases during January's policy meeting.
Structural Shifts Underpin Yen Strength
December's 0.6% annual wage growth marked the second consecutive monthly increase, supporting policymakers' view that sustainable inflation is taking root
Japan's 10-year government bond yields hover near 14-year peaks, contrasting with declining US Treasury yields
Economy Minister Ryosei Akazawa outlined plans to boost minimum wages and eliminate deflationary psychology
These developments occur against a backdrop of dollar weakness, with the DXY index retreating from multi-year highs. However, market participants appear cautious about extending yen longs ahead of the US employment report, leading to a 70-pip rebound from session lows.
Technical Outlook Favors Yen Bulls
The currency pair's breakdown below the critical 152.50-152.45 zone (encompassing both 100-day and 200-day moving averages) has activated bearish momentum. Daily chart indicators remain firmly in negative territory without approaching oversold conditions, suggesting potential for further downside.
Key resistance now stands at 152.00, with any recovery likely to attract fresh selling pressure. Support levels to watch include 151.00 (psychological barrier), followed by 150.55-150.50 and the 150.00 handle. A sustained move below these levels could open the path toward December's lows near 148.65.
Traders await the NFP release for confirmation of whether recent dollar weakness reflects temporary positioning adjustments or a more fundamental shift in rate expectations. The report's wage growth component may prove particularly significant for near-term direction.
