USD/JPY faces pressure as Japan unions target 6% wage hike for 2026

USD/JPY is trading under pressure near 152.80, down 0.2% in early Asian trading, as Japan's UA Zensen union group announced plans to demand a 6% wage increase in the 2026 spring wage negotiations (shunto). This development is crucial for the Bank of Japan's monetary policy outlook, as Governor Ueda emphasized the need to assess wage momentum before considering rate hikes. Markets have pushed back expectations for the first BoJ rate increase to March 2026 at the earliest, removing any 2025 hike probability. The substantial wage demand from UA Zensen, representing textile and retail sectors, could accelerate Japan's inflation normalization and support eventual yen strength. Technical indicators show immediate support at 152.50, with resistance at 153.20. Traders should monitor upcoming Japanese labor data and BoJ communications for potential shifts in monetary policy expectations that could trigger significant yen appreciation.