USD/JPY dips on uptick in wage pressure in Japan

Omkar Godbole FXStreet Contributor

Yen seems to love the fact that Japanese labor cash earnings jumped 0.5% y/y in April. The Dollar-Yen pair fell to a session low of 110.36, before recovering slightly to 110.42 levels.

Real wages remain flat

There was no improvement in the Japanese household purchasing power in April. The real wages, adjusted for consumer prices, remained flat. It followed a revised 0.3% annual fall in March.

The weak real wages explain the drop in the household spending in April. The absence of wage price inflation also explains why the core inflation has remained flat.

The lacklustre real wage growth figure is capping the downside in the USD/JPY pair. Meanwhile, the drop in the US 10-year treasury yield below its 200-DMA on Friday is keeping the gains in the USD/JPY under check.

The long duration treasury yields could continue to guide the USD/JPY pair for the rest of the day.

USD/JPY Technical Levels

The pair is just a whisker away from the support offered by the 200-DMA at 110.23; which, if breached could yield 110.00 (zero figure). A daily close below the same would open doors for 108.13 (recent low). On the higher side, resistance is seen at 110.69 (5-DMA) ahead of 111.02 (10-DMA) and 111.17 (50-DMA).

The daily RSI and MACD are nicely positioned in favor of the bears.

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Strongly Bearish	Neutral	High
1H	Bearish	Neutral	Expanding
4H	Strongly Bearish	Oversold	Expanding
1D	Strongly Bearish	Oversold	Low
1W	Bullish	Neutral	Expanding
Updated Jun 6, 00:15 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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