USD/JPY gained modestly Thursday, stabilizing near the top of its daily range amid strong U.S. equity market performance and rising Treasury yields. The pair has remained firmly supported by upbeat U.S. flash PMI data for November, which underscored resilience in the U.S. economy. Japan’s latest inflation figures, which showed core CPI exceeding the BOJ’s 2% target, and improving PMI data failed to provide a meaningful boost to the yen, as market participants largely discounted the likelihood of an imminent BOJ rate hike. While OIS pricing suggests a 15bps hike in December, traders appear hesitant to act on this expectation without further confirmation from next week’s Tokyo CPI and Japan Services PPI data.
Technically, USD/JPY is consolidating within a well-defined range of 152 to 157, with momentum traders awaiting a decisive breakout. Resistance at 155.02, marked by the daily conversion line, will be the first hurdle for bulls. Support rests near the 21-DMA at 153.78, and a breach below this level could signal increased bearish pressure. Falling implied yen volatility indicates reduced market expectations for sharp moves, though a breakout above 157 or below 152 could reignite directional momentum.
Looking ahead, U.S. data releases, including PCE inflation and home prices, will provide crucial insights into the Federal Reserve’s policy trajectory. Concurrently, Japan’s inflation readings next week may offer clues about the BOJ’s stance, especially as further yen weakening could pressure officials toward a more hawkish tone. Until a breakout materializes, directional bets in yen crosses like EUR/JPY may attract greater attention from traders.