USD/JPY remains subdued near 158.00 after reaching multi-month high

• USD/JPY hovers near 158.00 as it retreaces due to US economy creating 256,000 jobs last month, surpassing the forecasts.
• The US unemployment rate drops to 4.1%, with average hourly earnings slightly decreasing, influencing Fed rate cut projections.
• The US 10-year Treasury yield sees volatility, peaking at 4.788%.

The USD/JPY remains subdued after hitting a six-month high of 158.88 following the release of a stellar US Nonfarm Payrolls report, which saw the Unemployment Rate falling near 4%. The pair trades at 158.27, down 0.09%.

USD/JPY pair hits 158.88 amid speculation of Fed cutting once

The US Bureau of Labor Statistics (BLS) revealed that the economy created 256,000 jobs last month, although November was revised downward from 227,000 to 212,000. Forecasts expected 160,000 people to be added to the workforce, with private hiring totaling 223,000.

Furthermore, the Unemployment Rate fell to 4.1%, while Average Hourly Earnings (AHE) dipped from 4% to 3.9%. Following the data release, traders expect the Federal Reserve to cut rates just once in 2025.

The US 10-year Treasury note skyrocketed to 4.788% before retreating five basis points (bps) to 4.739%. This consequently weighed on the Greenback, as the USD/JPY turned negative, yet close to remaining almost unchanged.

The US Dollar Index (DXY) rose to 109.96, its highest level since November 2022. Recently, DXY pared some of its gains, is at 109.55, up 0.36%.

During the Asian session, Bloomberg revealed that the Bank of Japan (BoJ) is still mulling its rate decision for January and is also increasing inflation forecasts due to the softening Japanese Yen (JPY). The odds for a rate hike in January are seen as a coin flip.

The University of Michigan Consumer Sentiment for January is expected to show a slight improvement later in the day.

USD/JPY Price Analysis: Technical outlook

The USD/JPY ís pressured on Friday, yet the uptrend remains intact. Buyers need to clear the current year-to-date (YTD) peak at 158.88 to challenge 159.00 and eye the 160.00 figure. On the other hand, their first line of defense would be the Tenkan-sen at 157.45 before sliding further toward the latest swing low of 156.24.