Japanese Yen bulls retain control near multi-week top amid growing BoJ rate hike bets

The Japanese Yen (JPY) sticks to its strong intraday gains heading into the European session on Friday and keeps the USD/JPY pair hovering around the 150.00 psychological mark, just above a one-month low. Data released earlier today showed that consumer prices in Tokyo, Japan's capital, accelerated for the first time in three months. This backs the case for another interest rate hike by the Bank of Japan (BoJ) in December, which, along with geopolitical tensions and trade war fears, continues to underpin the JPY. 

Meanwhile, Scott Bessent's nomination as the US Treasury secretary and expectations that the Federal Reserve (Fed) will cut rates again in December keep the US Treasury bond yields depressed. This, in turn, drags the US Dollar (USD) to a fresh two-week low and turns out to be another factor that benefits the lower-yielding JPY. With the latest leg down, the USD/JPY pair has now retreated nearly 700 pips from a multi-month high touched earlier this November and seems vulnerable to extending its downward trajectory. 

The Japanese Yen clings to stronger Tokyo CPI-inspired gains amid safe-haven demand

• The Statistics Bureau of Japan reported on Friday that the headline Tokyo Consumer Price Index (CPI) surged 2.6% year-on-year in November as compared to 1.8% in the previous month.
• Meanwhile, core CPI, which excludes volatile fresh food items, rose 2.2% YoY and a gauge that strips out both energy and fresh food costs also climbed by 2.2% during the reported month. 
• A separate report showed Japan's Unemployment Rate edged higher as expected, to 2.5% in October and Retail Sales grew 1.6% YoY as compared to 0.5% in September and 2.2% expected. 
• Adding to this, Japan's Industrial Production registered strong growth of 3% in October as compared to 1.6% in the previous month, though the reading was short of the 3.9% rise anticipated. 
• Nevertheless, stronger inflation figures continue to fuel speculations that the Bank of Japan (BoJ) will hike interest rates again at its next monetary policy meeting in December. 
• Adding to this, worries that US President-elect Donald Trump's trade tariffs will affect the global economy and the protracted Russia-Ukraine war weigh on the market sentiment. 
• The US bond investors cheered the nomination of Scott Bessent, who is seen as a fiscal conservative and will likely want to keep a leash on US deficits, as the US Treasury Secretary. 
• This keeps the benchmark 10-year US Treasury bond yields and the US Dollar depressed near a two-week low, which is seen exerting additional pressure on the USD/JPY pair. 

USD/JPY consolidates heavy intraday losses around 38.2% Fibo. leve; seems vulnerable

From a technical perspective, an intraday breakdown below the 38.2% Fibonacci retracement level of the September-November rally and the 150.00 mark could be seen as a key trigger for bearish traders. Moreover, oscillators on the daily chart have been gaining negative traction and are still away from being in the oversold zone. This, in turn, supports prospects for a further near-term depreciating move for the USD/JPY pair, towards the next relevant support near the 149.45 region. The downward trajectory could extend further to the 148.00 neighborhood, or the 50% retracement level.

On the flip side, the previous monthly trough, around the 150.45 zone, now seems to act as an immediate hurdle ahead of the 152.00 mark. The latter coincides with the very important 200-day Simple Moving Average (SMA) support breakpoint and should act as a key pivotal point. A sustained strength beyond might trigger a short-covering rally towards the 152.65-152.70 intermediate hurdle en route to the 153.00 round figure and the 153.30-153.35 congestion zone.