Japanese Yen Hits New Daily Low Against USD Amid BoJ Rate-Hike Uncertainty

The Japanese Yen (JPY) softened to a fresh daily low against the US Dollar (USD) on Monday, erasing earlier gains from an upward revision in Japan’s Q3 GDP growth. The USD/JPY pair climbed back above the 150.00 level as doubts surrounding the Bank of Japan’s (BoJ) willingness to raise interest rates further weighed on the JPY.

BoJ Rate-Hike Concerns Weigh on JPY
Revised GDP data showed Japan’s economy grew by 0.3% quarter-on-quarter in Q3, compared to the initial estimate of 0.2%. On an annualized basis, growth was adjusted to 1.2% from 0.9%, though this marked a slowdown from Q2’s 2.2% increase. Weak private consumption suggests diminishing effects from wage hikes, casting doubt on the BoJ’s ability to continue tightening policy.

US Fed Rate Expectations Influence Markets
The US Nonfarm Payrolls (NFP) report for November exceeded forecasts, with 227,000 jobs added versus an expected 200,000. However, the unemployment rate edged higher to 4.2%, and wage growth remained stable. The data reinforced expectations for a December rate cut by the Federal Reserve, with borrowing costs likely to drop to between 4.25% and 4.50%.

US Treasury yields remain near recent lows, limiting USD strength. Meanwhile, comments from Fed officials, including Cleveland Fed President Beth Hammack and Chicago Fed President Austan Goolsbee, highlight a cautious approach to rate adjustments, balancing inflation and labor market conditions.

Technical Outlook for USD/JPY
The USD/JPY pair faces resistance at the 150.55 level, followed by key hurdles at 150.70, 151.00, and 151.20-151.25. A break above the 200-day SMA near 152.00 could shift the bias toward bullish traders.

On the downside, immediate support lies at 149.35, with further levels at 149.00, 148.65 (100-day SMA), and the critical 148.00 region. A break below these thresholds could lead to a deeper correction toward 147.35 and 147.00.

Broader Sentiment Remains Cautious
Geopolitical risks and concerns about upcoming trade policies, along with the market’s focus on U.S. inflation data due this week, are keeping traders cautious. This data could provide fresh direction for both the USD/JPY pair and broader market sentiment.