• The USD/JPY price analysis remains choppy despite a risk-off move in equities.
• Reduced odds of early Fed rate cuts amid upbeat US data keep the greenback supported.
• Japan’s political concerns weigh on the yen, but FX intervention warnings limit the downside.

The USD/JPY price is holding in a tight 158.40–158.60 range, shrugging off a modest risk-off move in US equities. Tech led the pullback, with the Nasdaq 100 down about 1.0%, while the S&P 500 and Dow slipped less. Despite softer risk sentiment, the dollar side of the pair remains well-supported, with the Dollar Index near 99.3, close to monthly highs.

The macro backdrop in the US still points to a firm dollar and an uptrend in USD/JPY. November retail sales rebounded about 0.6% MoM after a small October decline, and producer prices went near 3.0% YoY on both headline and core measures.

The unemployment rate around 4.4% does not point to a sharp labor-market downturn. This combination of strong demand, rising upstream prices, and stable jobs has pushed back expectations of the first Fed cut to June.

In the near term, rates are expected to stay in the 3.50–3.75% range. There is no longer a strong expectation of aggressive early easing in markets, which supports yields and keeps USD/JPY dips toward 155.00 well bid.

On the Japanese side, politics and FX intervention are more important to the story than domestic yields. Officials have been warning more and more against “one-way excessive moves.” Chief Cabinet Secretary Seiji Kihara has even said that intervention could occur if the yen weakens too quickly.

That has helped JPY outperform some high-beta currencies on days when risk is low. But the “Takaichi trade” goes the other way; hopes for an early snap election, a win for Sanae Takaichi, and a budget with excessive spending support Japanese stocks more than the currency, leaving no clear way for the BoJ.

USD/JPY Technical Price Analysis: Consolidation Below 20-MA
 

(Click on image to enlarge)

USD/JPY 4-hour chart
 

The 4-hour chart for USD/JPY shows selling pressure, as the price is below the 20-period MA. However, the pair has formed a bullish doji candlestick pattern, revealing sustained buying on the dips. Meanwhile, the pair continues to consolidate after falling from the 159.45 peak.

The RSI remains flat near 50.0, suggesting no clear momentum, while the MAs still point to more gains. The pair is expected to oscillate between 157.50 and 159.50. A clear breakout in either direction could trigger a meaningful trending move.

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