CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

• The Yen trims some losses following higher than expected inflation levels in Japan.
• The hot inflation figures have increased hopes of a BoJ hike in January.
• Technically, the pair is correcting lower, after having reached strongly overbought levels.

The Yen is picking up from five-month lows on Friday, supported by a somewhat softer US Dollar and hot Japanese inflation figures. The Dollar has pulled back from levels right below 158.00 and is testing support at the previous  56.60 resistance area.

Japanese data released on Thursday showed that inflation accelerated to a 2.9% yearly rate in November from 2.3% in October. Likewise, the core inflation increased 2.7% year-on-year, beating expectations of a 2.6% increment. These figures keep hopes of a January hike alive and provide some support to an ailing Yen.

BoJ-Yen divergence has crushed the JPY

The Bank of Japan kept rates unchanged on Thursday and conditioned a further rate hike to the evolution of next spring’s wage negotiations. Investors, who were expecting clearer signs of a January hike, were disappointed and the Yen tumbled against its main rivals.

One day earlier, the Federal Reserve cut interest rates but signalled a slower easing path for next year. The hawkish stance sent the US Dollar and US Treasury yields surging.

USD/JPY Technical analysis
 

The USD/JPY is correcting lower, after rallying about 2.6% earlier this week, reaching overbought levels on most timeframes.

The broader trend, however, remains positive, with bears contained above the previous top, at 156.60 and the next support level at 155.85 ahead of 154.45. Resistances are 158.00 and 158.80.

USD/JPY 4-Hour Chart

USD/JPY rose sharply after BoJ kept policy rate on hold yesterday. USD/JPY’s rise can also be attributed to the rise in UST yields as Fed guided for slower pace of rate cuts. The pair was last seen at 156.71. Back to BoJ, Governor Ueda’s remarks seem more cautious and appear to be ‘buying time’. He said that the ‘lack of wage info’ was one reason why policymakers held rates. He did say that ‘certain degree of info expected on wages by next meeting’, OCBC’s FX analysts Christopher Wong notes.

BoJ seems to be buying time

“He also touched on wanting to see more wage hike sustainability. He also mentioned that it will take a long time before the full picture is clear for both the spring wage negotiations and the Trump administration’s policies. That being said, he did warn that the BoJ must consider the risk of falling behind the curve carefully as real interest rates remain at very low levels. Chance of hike at the next MPC (24 Jan) is probably still live. But for now, the reluctance of BOJ and the guidance for Fed pause suggests that USD/JPY may continue to face intermittent upward pressure.”

“This morning, in response to the sharp 300pips fall in JPY against USD, Finance Minister Kato said authorities will take appropriate action if there are excessive moves in currency markets. Currency Chief Mimura also spoke about taking appropriate response if excessive FX moves. Verbal intervention in the face of strong USD trend and policy inaction can only be at best in slowing JPY’s bout of depreciation pressure. What can stop JPY from further weakening in the near term would be a less dovish BoJ, some guidance in expectations for BoJ hike in due course and/or a softer USD.”

“Bullish momentum on daily chart intact while RSI show signs of turning from near overbought conditions. Resistance at 158, 158.90 levels. Support at 156.67 (76.4% fibo retracement of Jul high to Sep low), 154.50/155 levels.”

• USD/JPY attracts some intraday sellers after stronger inflation figures from Japan.
• The risk-off mood and retreating US bond yields also benefit the lower-yielding JPY.
• The divergent Fed-BoJ outlook should limit losses ahead of the US PCE Price Index.

The USD/JPY pair retreats following an intraday uptick to the 158.00 neighborhood, or a five-month peak and continues losing ground through the early European session on Friday. As investors look past the Bank of Japan (BoJ) monetary policy update on Thursday, strong inflation data from Japan, along with the risk-off mood, benefits the safe-haven Japanese Yen (JPY) and exerts some pressure on the currency pair. The BoJ decided to keep the short-term rate target unchanged at the end of the December policy meeting and offered few clues on how soon it could push up borrowing costs. That said, a government report showed that Japan's National Consumer Price Index (CPI) rose more than expected in November and keeps the door open for a potential rate hike in January or March. 

In fact, the Japan Statistics Bureau reported that the National CPI climbed 2.9% YoY in November compared to the 2.3% previous reading. Additional details revealed that the National CPI ex Fresh food arrived at 2.7% YoY versus 2.3% in October and was above the 2.6% market expectations. Moreover, CPI ex Fresh Food, Energy rose 2.7% YoY in November versus the 2.3% increase recorded in the previous month. This points to a sustained uptick in inflation and might force the BoJ to hike interest rates again early in 2025, which, in turn, provides some respite to the JPY bulls. Apart from this, the global flight to safety, amid the looming US government shutdown, drives some haven flows towards the JPY and drags the USD/JPY pair further below the 157.00 mark on the last day of the week. 

The US House of Representatives failed to pass A spending bill to fund the government on Thursday, raising the risk of a partial shutdown at the end of the day on Friday. This comes on top of persistent geopolitical risks and concerns about US President-elect Donald Trump's tariff plans, which, in turn, tempers investors' appetite for riskier assets and boosts demand for traditional safe-haven assets. The flight to safety triggers a modest pullback in the US Treasury bond yields, from a multi-month peak set on Thursday, and keeps a lid on the post-FOMC US Dollar (USD) rally to a two-year peak. This turns out to be another factor that contributes to the offered tone surrounding the USD/JPY pair. That said, the Federal Reserve's (Fed) hawkish outlook should limit losses for the USD and the major. 

Traders might also refrain from placing aggressive bets ahead of Friday's release of the US Personal Consumption Expenditure (PCE) Price Index, due later during the early North American session. The Fed's preferred inflation gauge should provide a fresh impetus to the USD and drive the USD/JPY pair. Nevertheless, spot prices remain on track to register gains for the third successive week. Moreover, the aforementioned fundamental backdrop seems tilted firmly in favor of bullish traders and supports prospects for an extension of the recent well-established uptrend from the 148.65 region, or the monthly low touched on December 3.

USD/JPY daily chart

Technical Outlook

From a technical perspective, the intraday pullback could be attributed to some profit-taking amid a slightly overbought Relative Strength Index (RSI) on the daily chart. That said, the overnight strong move up beyond the previous multi-month top, around the 156.75 area, favors bullish traders. Hence, a strong follow-through selling is needed before confirming that the USD/JPY pair has topped out in the near term and positioning for deeper losses. 

In the meantime, any subsequent slide is likely to attract some buying and remain limited near the 156.00 mark. Some follow-through selling, however, might expose the next relevant support near the 155.50 horizontal zone, below which the USD/JPY pair could drop to the 155.00 psychological mark. The latter should act as a key pivotal point, which if broken decisively might shift the near-term bias in favor of bearish traders. 

On the flip side, the 157.45-157.50 area now seems to act as an immediate hurdle ahead of the 158.00 mark. A sustained strength beyond has the potential to lift the USD/JPY pair to the 158.45 hurdle en route to the 159.00 round figure. The momentum could extend further towards the 159.60-159.65 region, above which spot prices might aim to conquer the 160.00 psychological mark and climb further to the 160.20 hurdle, which coincides with the top end of a multi-month-old ascending channel.

• The USD rallied beyond 2% after the Fed and the BoJ's decisions to hit levels right above 157.00.
• The Bank of Japan left interest rates at 0.25% and conditioned further tightening to the evolution of wage negotiations.
• Monetary policy divergence between the US and the Japanese Central banks is weighing on the Yen.

The Yen is dropping across the board on Thursday, weighed by a dovish BoJ monetary policy decision. This, coupled with the hawkish stance reflected at Wednesday’s monetary policy statement, has pushed the pair to test levels above 157.00.

The Bank of Japan kept its benchmark interest rate unchanged at 0.25% with Governour Ueda failing to clarify whether they will hike rates in January, as some market sources had anticipated.

Ueda warned that prolonged easing conditions may lead to a surge in inflation but he conditioned the next policy decisions on the evolution of the wage negotiations. Investors reacted by selling the Yen against its main rivals.

The Yern was already on its back foot after the outcome of Wednesday’s US Federal Reserve meeting. The bank cut interest rates by 25 basis points but projected two cuts in 2025, instead of the four anticipated in September, which sent US Yields and the USD surging.
 

The Bank of Japan announced policy, delivering a rather cautious hold which has been digested as a dovish surprise by markets, ING’s FX analyst Francesco Pesole notes.

Direction of travel for USD/JPY looks clearly towards the 158/160 area

“Consensus was indeed for a hold today but probably expecting more openness towards a hike in January. Governor Kazuo Ueda sounded more data-dependent than forward-guidance-orientated, saying additional information on wages and growth is needed.”

“USD/JPY has surged through 155 on the back of the hawkish Fed and a hesitant BoJ. The direction of travel looks clearly towards the 158/160 area – an area where the BoJ has sold close to $100bn this year in previously successful attempts to stabilize the yen.”

“We presume the incoming US Treasury will not mind this intervention given that Japan will be trying to support its currency. And back in 2019, the US Treasury labelled China a currency manipulator for allowing its currency to weaken.”

• USD/JPY rises as the Federal Reserve cut its benchmark interest rate by 25 basis points (bps) to a target range of 4.25% - 4.50%.
• The Federal Reserve lowered the policy rate by 25 basis points (bps) to a range of 4.25% - 4.50%.
• Fed officials forecast that the economy will continue to expand at a solid pace, even though labor market conditions have softened.
• The FOMC will consider incoming data, the evolving outlook, and the balance of risks when making future interest rate decisions.

On Wednesday, the USD/JPY currency pair rose after the Federal Reserve cut interest rates by 25 basis points. The Federal Reserve lowered its benchmark interest rate by 25 basis points to a range of 4.25% to 4.50% and Fed officials indicated that the economy would continue to expand despite softer labor market conditions.

However, they noted that inflation remained elevated and the economic outlook was uncertain. The Fed will consider incoming data, the evolving outlook, and the balance of risks when making future interest rate decisions. Policymakers emphasized that they were committed to achieving their dual mandate of price stability and maximum employment.

For 2025, the Fed is forecasting a rate of 3.9%, up from the earlier projection of 3.4%, and a further increase is expected for 2026, with a target rate of 3.4%. These projections suggest a slightly more hawkish stance, maintaining a focus on balancing inflation control with economic growth. However, the Fed will continue to monitor incoming data and adjust its policies accordingly, keeping a close eye on economic trends and risks.

USD/JPY technical analysis

The technical analysis for USD/JPY shows that the pair is currently experiencing increasing buying pressure, with the Relative Strength Index (RSI) rising sharply. The Moving Average Convergence Divergence (MACD)is also in a bullish phase, as indicated by a rising histogram. Resistance levels are found at 154.50, 155.00, and 156.00, suggesting that the pair may continue to test this levels if demands for the USD continues rising

Consensus leans towards no move while we stuck to our view for a hike. Typically, BoJ MPC decision can matter for USD/JPY but this time, the USD/JPY may also matter for BoJ given the >3% decline in JPY lately. USD/JPY was last seen at 153.94 levels, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

Moving averages compression is observed

“For BoJ MPC (Thu), we are looking for BoJ to carry on with policy normalization with a hike. Recent uptick in base pay supports the view about positive development in labor market, alongside still elevated services inflation, better 3Q GDP and expectations for 5-6% wage increases for 2025. For USD/JPY, it is not just JPY or BoJ in the equation, the Fed and US data also matters.”

“While we are of the view that broader direction of travel for USD/JPY is skewed towards the downside as Fed cuts and BoJ hikes. The risk is a slowdown in pace of respective policy normalisation, especially if Fed guides for a much slower pace of cuts or BoJ shows hesitation. Then the USD/JPY may face intermittent upside risks.”

“Mild bullish momentum intact but RSI eased. Moving averages compression (MAC) observed and this typically precedes a breakout trade. Support at 152.70, 152.10 (21, 100, 200 DMAs) and 150.20 (38.2% fibo). Resistance at 154.80, 155.90 levels.”

• The Japanese Yen's recovery attempts remain limited ahead of the Fed's decision.
• Investors are bracing for a 25 bps cut combined with a hawkishly tilted forward guidance.
• In Japan, the BoJ is expected to keep rates on hold on Thursday.

The US Dollar maintains its upside trend from early December lows intact. The pair’s reversal from the mid-range of the 154.00s has been contained at 153.20, and the pair is trading sideways on Wednesday, awaiting the Fed’s decision

The US central bank is widely expected to cut rates by 25 basis points but the ensuing monetary policy statement, and, above all, the economic and interest rate projections are likely to show a hawkish tilt.

Macroeconomic figures released this week reveal strong economic activity and buoyant consumption levels, These figures are consistent with higher inflationary pressures and will likely prompt policymakers to scale down the monetary easing projections for next year.

In Japan, on the other hand, the Bank of Japan seems less concerned about the impact of a strong Yen on the country’s inflation. Some board members suggested last week that there is no harm in waiting for next January to hike rates further. This has been weighing on the Yen, which depreciated nearly 3% in a sis-day sell-off before Tuesday.
 

• The Dollar corrects lower after a six-day rally.
• The widening gap between US and Japanese Treasury yields is likely to keep US downside attempts limited.
• US Retail Sales data, due later today might provide an additional boost to the Dollar.

The US Dollar retreated slightly on Tuesday, after a nearly 3% appreciation in a six-day rally. The current reversal looks like a corrective reaction, which will probably be a mild one considering the US Treasury yield’s rally.

The benchmark US 10-year yield is appreciating for the seventh consecutive day to reach levels past 4.40%. The widening gap between the US and the Japanese bond yields is likely to act as a headwind for Yen’s recovery.

Strong US data is supporting the USD

US macroeconomic data points out a strong growth in the fourth quarter. Investors remain confident that the Fed will cut rates in December although the bank might highlight the storing economic momentum and the higher inflation to adopt a more hawkish forward guidance.

The Bank of Japan, on the contrary, is expected to keep rates on hold on Thursday, after having hinted at a 25 bps cut until last week. Some dovish comments by BoJ officials suggest that the bank might wait till January to assess the implications of Trump´s policies in the US.

In the calendar today, US Retail Sales are expected to show a buoyant consumption. This, coupled with the strong services activity figures released this week, are likely to keep US Dollar downside attempts limited, at least until the outcome of the Fed meeting.

 

• USD/JPY holds steady near 154.10 in Tuesday’s early Asian session. 
• The US Composite PMI rose to 56.6 in December’s flash estimate vs. 54.9 prior. 
• The BoJ is anticipated to keep the rate unchanged at its December meeting on Thursday. 

The USD/JPY pair trades flat around 154.10 during the early Asia session on Tuesday. Traders prefer to wait on the sidelines ahead of the Federal Reserve (Fed) and the BoJ interest rate decision later this week. On Tuesday, the US November Retail Sales will be published. 

The strong US economic data fails to boost the Greenback as the markets turn cautious ahead of the key events. Data released by S&P Global on Monday showed that the US Composite Purchasing Managers Index (PMI) rose to 56.6 in December’s flash estimate versus 54.9 prior. Meanwhile, the Services PMI improved to 58.5 in December’s flash estimate from 56.1. The Manufacturing PMI declined to 48.3 from 49.7. 

The Fed will make its next decision on interest rates on Wednesday, which is widely expected to cut rates by 25 basis points (bps). According to the CME FedWatch tool, markets are now almost fully pricing a 25 basis points (bps) cut at the Fed's December meeting, compared with about a 78% chance a week ago. Investors will closely monitor Fed Chair Jerome Powell's press conference and Summary of Economic Projections (dot-plot) after the meeting. 

On the other hand, the growing expectation that the Bank of Japan (BoJ) will keep rates steady at the December meeting on Thursday might weigh on the Japanese Yen (JPY). The markets are currently pricing in less than a 30% possibility of a rate hike in December. Several BoJ policymakers appear to be in no rush to tighten their monetary policy further with little risk of inflation overshooting despite Japan's still near-zero borrowing costs.

• USD/JPY advances beyond the 154.00 mark, dismissing stronger-than-expected Japanese Flash PMIs for December.
• Technical analysis highlights a bullish trend with the pair clearing key technical barriers, including the 200-day SMA and Kijun-Sen.
• Potential resistance lies at the November 20 high of 155.89; supports are positioned at the Kijun-sen at 152.69 and further at 152.10-11.

The USD/JPY extended its gains as the Japanese Yen (JPY) remains the laggard in the G10 FX complex. Although Japan’s Jibubank Flash PMIs for December improved, traders ignored the data. The pair trades above the 154.00 figure, a level last seen in November 26.

USD/JPY Price Forecast: Technical outlook

the USD/JPY continued to extend its gains, past the 200-day Simple Moving Average (SMA) and the Kijun-Sen, opening the door to clear 153.00 and the previously mentioned 154.00.  

Momentum favors further USD/JPY upside as depicted by the Relative Strength Index (RSI), which aims higher.

The first resistance would be the November 20 daily high at 155.89. A breach of the latter will expose 156.00, followed by the November 15 swing high of 156.75. Conversely, if USD/JPY tumbles below 154.00, the first support is the Kijun-sen at 152.69, followed by the Senkou Span A at 152.21. if surpassed, the next support would be the confluence of the 50 and 200-day SMAs at 152.10-11

USD/JPY Price Chart – Technical outlook

USD/JPY rose as bets on BOJ hike this week was scaled back significantly while USTs saw a sell-off last Fri (i.e. UST yields rose sharply). Pair was last at 153.70, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Daily momentum turns mild bullish

“USD/JPY’s breakout was well anticipated in our technical scan when we first highlighted about moving averages compression (MAC) last week. We noted that this pattern typically precedes a break-out trade. Daily momentum turned mild bullish while RSI rose to near overbought conditions. Resistance at 154.80, 155.90 levels. Support at 152.70, 152.10 (21, 100, 200 DMAs). A decline back below the MA ‘convergence level’ would nullify the bullish break-out.”

“This week, BoJ MPC (19 Dec) matters for USDJPY. We are looking for BoJ to carry on with policy normalization with a hike this week and into 2025. Recent uptick in base pay supports the view about positive development in labour market, alongside still elevated services inflation, better 3Q GDP and expectations for 5-6% wage increases for 2025 should pace the room for BoJ policy normalisation.”

“That said, the risk is a slowdown in Fed and/or BoJ’s pace of policy normalisation would affect USDJPY’s moves.”

• The Yen extends losses on dovish BoJ comments and higher US Yields.
• Hopes of gradual easing by the Fed are keeping the US Dollar buoyed.
• US Vdata seen this week revealed that inflation pressures are picking up.

The US Dollar is trading higher on Friday, approaching the 153.50 area supported by the widening gap between US and Japanese Treasury yields, as hopes of a BoJ hike next week fade.

A Bloomberg report citing BoJ officials revealed that the bank sees little cost in waiting to hike rates. These comments have boosted speculation that the Bank will keep rates on hold next week hammering the Yen across the board.

In the US, data released on Thursday was mixed, with US Jobless Claims increasing against expectations and Producer Prices accelerating beyond the market consensus.

These figures, coupled with the strong US CPI reading seen earlier this week, confirm that inflation pressures are picking up and endorse the view of only gradual Fed easing next year. 
 

US Dollar (USD) is expected to trade with an upward bias, but is unlikely to reach the major resistance at 153.30. In the longer run, the next level to watch is 154.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Above 153.30, USD/JPY can test 154.00

24-HOUR VIEW: “USD swung in a wide range between 151.00 and 152.79 on Wednesday. Yesterday (Thursday), we highlighted that ‘the choppy price action has resulted in a mixed outlook.’ We also highlighted that USD ‘could trade in range, probably staying within yesterday’s range of 151.00/152.79.’ USD then traded in a narrower range than expected (151.79/152.77), closing at 152.62 (+0.11%). The price action has resulted in a slight increase in momentum. Today, we expected USD to trade with an upward bias, but the major resistance at 153.30 is likely out of reach. Support levels are at 152.30 and 151.80.”

1-3 WEEKS VIEW: “We continue to hold the same view as yesterday (12 Dec, spot at 152.15). As highlighted, there has been a tentative buildup in momentum, and USD ‘could grind higher towards 153.30.’ Looking ahead, should USD break above 153.30, the next level to watch is 154.00.”

The US Dollar recovery loses steam with bulls halted at 152.90.
Dovish comments from BoJ officials and strong US data are supporting the pair.
The immediate bias remains positive, with bears capped above 152.00.

The US Dollar has snapped a three-day positive trend on Thursday. The pair is trading with moderate losses with the market focusing on US Producer Prices and and Jobless Claims figures, due later today.

From a wider perspective, however, the pair maintains its immediate bullish trend. The dovish comments from BoJ policymakers suggesting that there is no rush to hike interest rates cast doubts on the outcome of next week’s monetary policy decision and will likely keep the Yen on its back foot.

A dovish BoJ and strong US data support the Dollar

The higher US Treasury yields, with the 10-year yield hitting 4.3% - from 4.12% last week is another source of support for the Greenback. US inflation accelerated in November at its fastest pace in seven months, which is forcing investors to dial back hopes of monetary easing for 2025.

The focus today is on November’s PPI and last week’s Jobless Claims figures. Price pressures are expected to have also increased at factory gates with unemployment claims declining. This would endorse the view of a resilient US economy, increasing support for the Greenback

USD/JPY Technical Outlook

The 4-hour USD/JPY chart shows the pair correcting higher, with bulls capped so far at the 50% Fibonacci retracement level of November’s sell-off.

The immediate bias remains positive, with price action standing above the 100-period SMA, which meets the price right below 152.00. the key support for the upside trend is at 150.90. Resistances are at 152.85 and 153.60 

 

USD/JPY rose sharply, in response to news that BoJ officials see little cost to waiting before raising rates. Pair was last seen at 152.20 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

BoJ to carry on with policy normalization

“Bearish momentum on daily chart shows signs of fading but rise in RSI slowed. We reiterated a compression of moving averages, with 21, 50, 200 DMAs converging. This typically precedes a directional break-out trade. Resistance at 152.50/70 levels (21 DMA, 23.6% fibo), 154.70 levels. Support at 152 (50, 200 DMAs), 150.20 (38.2% fibo retracement of Sep low to Nov high).”

“Tomorrow brings Tankan survey before BoJ MPC (19 Dec). But largely, we are looking for BoJ to carry on with policy normalization with a hike next week and into 2025. Recent uptick in base pay supports the view about positive development in labour market, alongside still elevated services inflation, better 3Q GDP and expectations for 5- 6% wage increases for 2025.”

“That said, the risk is a slowdown in Fed and/or BoJ’s pace of policy normalisation would affect USD/JPY’s moves.”

Outlook for US Dollar (USD) is mixed; it could trade in a range, probably staying within yesterday’s range of 151.00/152.79. In the longer run, tentative buildup in momentum suggests USD could grind higher towards 153.30, UOB Group’s FX analyst Quek Ser Leang and Lee Sue Ann note.  

USD can grind higher towards 153.30

24-HOUR VIEW: “Two days ago, USD soared to 152.17. Yesterday, we stated that ‘while the rapid rise appears to be excessive, there is scope for USD to test 152.45 before the risk of a pullback increases.’ The ensuing price movements did not develop as we expected as USD swung between 151.00 and 152.79, closing at 152.45 (+0.33%). The choppy price action has resulted in a mixed outlook. Today, USD could trade in range, probably staying within yesterday’s range of 151.00/152.79.”

1-3 WEEKS VIEW: “We indicated yesterday (11 Dec, spot at 151.80) that USD ‘must break and hold above 152.45 before further advances can be expected.’ USD then rose to a high of 152.79, pulling back to close at 152.45. While we would prefer a stronger daily close, the price action suggests that USD could grind higher towards 153.30. On the downside, if USD breaks below 151.75 (‘strong support’ level was at 151.45 yesterday), it would indicate that the current tentative buildup in upward momentum has faded.”

• USD/JPY increases 0.37%, buoyed by November’s CPI data which confirmed analysts' expectations.
• US headline CPI rose slightly, but core figures remained stable, supporting potential Fed rate adjustments.
• Anticipation grows for a possible Fed rate cut, with odds favoring a 25 basis point reduction next week.

The USD/JPY rose some 0.37% early in the North American session as traders digested the release of November US Consumer Price Index (CPI) figures, which came as expected by the consensus. At the time of writing, the pair trades volatile at around 152.50.

USD/JPY pair ascends, responding to inline CPI figures and stable Treasury yields

The US Bureau of Labor Statistics (BLS) revealed that headline CPI was 0.3% MoM, a tenth high, but aligned with estimates of 0.2%. Core CPI was unchanged at 0.3% MoM, which was aligned with projections for October and Wall Street.

In the twelve months to November, CPI was up from 2.6% to 2.7%, while core CPI was unchanged compared to October, as projected by the consensus at 3.3%.

After the data, the USD/JPY resumed to the upside, while the US 10-year Treasury note yield, pared its earlier gains, stands at 4.226% flat.

November’s CPI has increased the chances of the Fed cutting interest rates another 25 basis points (bps), with odds standing at 84%, according to the CME FedWatch Tool.

Source: Prime Market Terminal (PMT)

Michael Brown of Pepperstone says the figures shouldn’t deter the FOMC from a quarter-point cut next Wednesday.

This week, the US economic docket will feature the release of the Producer Price Index (PPI) along with Initial Jobless Claims figures for the week ending December 7.

USD/JPY Price Forecast: Technical outlook

The USD/JPY daily chart suggests that bulls are facing stir resistance at the Kijun-Sen at 152.69, failing to gain traction, which could witness the pair rallying toward the November 20 high of 155.89, ahead of the 156.75 daily peak of November 15. However, the pair has been carving successive series of lower highs and lower lows, and unless bulls clear the Kijun-Sen, sellers could drive prices inside the Ichimoku Cloud.

On further weakness, the USD/JPY could drop below 152.00 and extend its losses toward the 100-day Simple Moving Average (SMA) at 148.65.

• USD/JPY jumps to near 152.50 amid US Dollar strength ahead of the US inflation data.
• Economists expect the US CPI to have remained sticky in November.
• BoJ officials reiterated a data-dependent approach for another interest rate hike.

The USD/JPY pair climbs to near 152.50 in the European trading session on Wednesday. The asset strengthens as the US Dollar (USD) extends its winning streak for the fourth trading session on Wednesday ahead of the United States (US) Consumer Price Index (CPI) data for November, which will be published at 13:30 GMT.

The inflation report is expected to show that the annual headline CPI accelerated at a faster pace to 2.7% from the prior release of 2.6%. The core CPI – which excludes volatile food and energy prices – rose steadily by 3.3%.

Investors will pay close attention to the US inflation data as it will influence expectations for the Federal Reserve’s (Fed) interest rate action in the policy meeting on December 18. According to the CME FedWatch tool, the probability for the Fed to reduce interest rates by 25 bps to 4.25%-4.50% is 86%.

As the Fed is widely anticipated to cut its key borrowing rates next week, investors will pay close attention to the interest rate guidance. Analysts at Macquire agree with Fed rate cut market expectations for Fed rate cuts next week but expect the central bank to deliver a slightly hawkish interest rate guidance.

“The recent slowdown in the pace of US disinflation, a lower Unemployment Rate than what the Fed projected in September, and exuberance in US financial markets are contributing to this more hawkish stance,” analysts at Macquarie said.

Meanwhile, the Japanese Yen (JPY) will be guided by expectations about whether the Bank of Japan (BoJ) will raise interest rates in the monetary policy meeting on December 19. Bloomberg reported on Wednesday some sources said few BoJ officials remain open to a hike next week depending on data and market developments. They don’t see any impact in waiting for the next rate hike.