The Japanese Yen (JPY) is beginning the week with a positive trend, bolstered by several factors, although its potential for significant gains appears constrained. Recent government data indicates that Japan’s economy grew at a faster rate in the third quarter than previously estimated. Additionally, rising geopolitical tensions and concerns surrounding the U.S. trade policies under the incoming administration are providing further support for the safe-haven currency.
The decline in U.S. Treasury bond yields is playing a crucial role in the JPY’s relative strength against the dollar, helping to keep the USD/JPY trading below the critical psychological level of 150.00 during the Asian trading session. Market participants remain divided about whether the Bank of Japan (BoJ) will raise interest rates in its upcoming December meeting, which may prevent aggressive bets from JPY supporters and result in a sideways trading pattern for the currency pair.
Japan recently revised its third-quarter GDP growth to 0.3%, up from the earlier estimate of 0.2%. Year-on-year, the economy expanded by 1.2%, surpassing prior forecasts of 0.9%, but this marks a slowdown from the 2.2% growth seen in the previous quarter. The sluggishness in private consumption raises questions about whether the BoJ can raise interest rates further, limiting the JPY’s ability to maintain momentum and resulting in only a modest uptick.
In the U.S., the latest Nonfarm Payrolls report revealed the addition of 227,000 jobs in November, significantly higher than the prior month’s revised figure of 36,000 and above the consensus expectation of 200,000. Despite this positive employment data, the unemployment rate edged up slightly to 4.2%. Market sentiment suggests that the Federal Reserve is unlikely to halt its easing policies at the next meeting, which puts further pressure on the dollar and maintains the appeal of the lower-yielding JPY.
Technical indicators point toward a bearish consolidation for the USD/JPY , with a notable resistance level at approximately 150.55. Immediate support is found around the 149.35 area, while a significant focus remains around the 100-day Simple Moving Average near 148.70. If selling pressure continues, further declines could test the 148.00 region. Conversely, if recovery attempts gain traction, bullish traders will look for confirmation above the critical dynamic levels to signal a shift in momentum.
