USDJPY losses continued to extend on Wednesday as many investors continue to be cautious on the dollar amid US tariff wars. The pair hit a seven-week low of 152.54 before recovering ground to trade at 152.74 and down by 1.02% on the daily chart at the time of writing. The dollar has lost 2.8% of its value against the yen in the last month, and is on course to register the second successive monthly loss.
The US dollar is exposed to the sour sentiment created by the tariff war between the United States and China. There are concerns that the tug-of war-between the two largest economies in the world could raise the inflation rate in the US and weaken the dollar further.
Meanwhile, Japan’s real wage grew by 0.6% year-on-year in December 2024, the second successive monthly growth after November’s figure was adjusted upwards from-0.3% to +0.5%. Base salaries followed a similar trend, growing by 2.5% in November and 2.7% in December. However, wages fell by 0.3% on an annualised basis in 2024, the third successive decline.
The country’s workers’ union, Rengo, is advocating for a 5% hike in wages in 2025. That has added credence to the likelihood of interest rate hikes by the Bank of Japan in the first quarter of the year. The secenario adds downward pressure on the USDJPY pair ahead of Friday’s release of US Unemployment Rate and Non Farm Payrolls (NFP) data.
USDJPY Prediction
USDJPY pivot mark is at 153.05 and action below that mark signifies control by the sellers. The first support is likely to be at 152.50, but a stronger downward momentum could break below that level and test 152.00.
On the flipside, moving above 153.05 will signal the onset of upward momentum. The first barrier is likely to be at 153.42. However, a stronger upward momentum will breach that mark and invalidate the downside narrative. Also, such a move could clear the path to move towards the second resistance at 153.85.
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