The USD/JPY outlook shows a stronger yen amid increasing bets for a December rate hike by the Bank of Japan. However, the pair fluctuated on Friday after mixed economic data from Japan. Meanwhile, the dollar remained strong after data in the previous session revealed a still-tight US labor market.Japan released mixed reports on Friday, which initially boosted the yen before it gave up its gains. Core consumer inflation in the country increased by 2.3% in October, above forecasts of 2.2%. At the same time, services inflation increased by 1.5% after a previous reading of 1.3%. Increasing price pressures give the Bank of Japan enough room to hike interest rates. As a result, traders raised the likelihood of a December rate hike. At the same time, a Reuters poll revealed that 56% of economists expect the Bank of Japan to hike rates in December. This increased from the previous month when only 49% expected such a move; hence, the yen gained.However, a separate report revealed that manufacturing activity in Japan fell in November amid weak demand in China. On the other hand, data from the US on Thursday revealed that jobless claims unexpectedly fell to 213,000, compared to forecasts of 220,000 claims. Few claims indicate a low unemployment rate and a robust labor market, boosting the dollar. At the same time, a strong labor market lowers the likelihood of a Fed rate cut in December. Market participants are now awaiting US business activity data for more clues on whether policymakers will vote to cut rates in December. USD/JPY key events today
USD/JPY technical outlook: Bears meet strong hurdle at 154.51(Click on image to enlarge)
USD/JPY 4-hour chartOn the technical side, the price trades below the 30-SMA with the RSI below 50, supporting a bearish bias. However, the decline has paused to consolidate near the 154.51 key support level. Price action shows many wicks as bears and bulls battle for control between the support level and the 30-SMA resistance. If bears win, the price will make a lower low and target the next support at 151.74. On the other hand, if bulls win, USD/JPY will breach the SMA to retest the 156.51 resistance level.More By This Author:GBP/USD Price Analysis: Hits 6-Month Low as UK Sales SlumpUSD/CAD Price Analysis: Canada Inflation Exceeds ProjectionsGBP/USD Forecast: UK Inflation Surprise Briefly Lifts Pound
