Overall employee income declined from 2.5% to 0.5%, while overtime compensation fell from 2.1% to 1.2%. However, the negative dynamics were partially offset by a rebound in the household spending index in November, which rose from –3.5% to 6.2% on a monthly basis and from –3.0% to 2.9% year-on-year. Taking the incoming data into account, the Bank of Japan’s hawkish stance has strengthened. In the summary of opinions published earlier this week, Governor Kazuo Ueda pointed to wage indicators as the most important factor, noting that a decline in wages could accelerate inflation, potentially requiring further tightening of monetary policy.

The US dollar has shifted to the upside and is holding near 98.70 in the USDX after the release of labor market data. Initial jobless claims rose from 200.0K to 208.0K, beating forecasts of 213.0K, while continuing claims increased from 1.858M to 1.914M versus expectations of 1.900M. At the same time, the four-week average fell from 219.00K to 211.75K. Given these figures, the probability of the US Federal Reserve keeping interest rates unchanged at 3.50–3.75% at its January meeting remains high, according to the Chicago Mercantile Exchange (CME Group).

Support and Resistance Levels

On the daily chart, the instrument is approaching the resistance line of a long-term ascending channel with boundaries at 160.00–152.00.

Technical indicators continue to signal a buy, which was generated in early October: the fast EMAs of the Alligator indicator are diverging further from the signal line, while the AO histogram is forming corrective bars above the zero line.

Resistance levels: 157.80, 160.60.

Support levels: 155.40, 152.00.

USD/JPY chart

Trading Scenarios and USD/JPY Outlook

Long positions can be opened after a rise and consolidation above the 157.80 level, with a target at 160.60. Stop-loss: 156.70. Time horizon: 7 days or longer.

Short positions can be opened after a decline and consolidation below the 155.40 level, with a target at 152.00. Stop-loss: 156.40.

Scenario

Timeframe Weekly
Recommendation BUY STOP
Entry point 157.85
Take Profit 160.60
Stop Loss 156.70
Key levels 152.00, 155.40, 157.80, 160.60

Alternative Scenario

Recommendation SELL STOP
Entry point 155.35
Take Profit 152.00
Stop Loss 156.40
Key levels 152.00, 155.40, 157.80, 160.60