FxWirePro: USD/JPY Daily Outlook

Chart - Courtesy Trading View 

USD/JPY was trading 1.03% lower on the day at 137.70 at around 09:00 GMT, slightly above session lows at 137.42.

A narrowing of the US-Japan rate differential, which provides an additional lift to the Japanese Yen.

After a dovish November FOMC meeting minutes, the US central bank is now expected to deliver a 50 bps rate hike in December. 

Long-term US Treasury yields have dropped further below 3.65% as anxiety ahead of Fed Powell’s speech soars.

The Bank of Japan (BoJ), on the other side, has shown no inclination to hike interest rates. Governor Haruhiko Kuroda reiterated that the central bank will stick to its monetary easing to support the economy and achieve the 2% inflation target in a stable fashion.

Japan's headline Consumer Price Index (CPI) in Tokyo escalated to 3.8% vs. the consensus of 3.6%. While core CPI jumped to 2.5% against the projections of 2.1%.

Prime Minister Fumio Kishida said earlier on Monday, “It is critical for the government and the Bank of Japan (BOJ) to collaborate closely and respond flexibly in order to achieve long-term, stable inflation.” 

Technical bias for the pair is bearish. Price action is extending weakness below cloud and 110-EMA. The major is on track to test 200-DMA at 134.05.