USD/JPY weakens as Japan wage growth boosts BOJ rate hike expectations

USD/JPY has slipped 0.4% to 149.75 as strengthening Japanese wage data reinforces expectations for a Bank of Japan (BOJ) interest rate hike in upcoming meetings. Recent labor market reports show Japanese wage growth accelerating beyond forecasts, providing the BOJ with justification to normalize monetary policy after years of ultra-loose conditions. The yen's appreciation comes despite broader dollar strength, highlighting the significance of Japan's improving fundamentals. Market positioning suggests traders are increasingly betting on BOJ action, with futures markets pricing in a 65% probability of a rate hike by March 2025. Technical indicators show USD/JPY breaking below the key 150.00 psychological level, with next support at 149.20 (50-day moving average). Resistance now sits at 150.50. The diverging monetary policy paths between the Federal Reserve's pause and potential BOJ tightening could drive further yen strength, making USD/JPY an attractive short opportunity for trend followers.