JPY strengthens on rate hike expectations, USD/JPY drops below key support

The Japanese yen led gains among major currencies as USD/JPY fell 0.8% to 151.20, breaking below the 152.00 psychological support level. Better-than-expected Japanese wage data fueled speculation of a Bank of Japan rate hike at next week's policy meeting, with markets now pricing in a 65% probability of a 25-basis-point increase. Japan's November wage growth accelerated to 3.0% year-over-year, exceeding forecasts and supporting the BoJ's normalization path. Meanwhile, the dollar faced broad selling pressure as traders positioned ahead of this week's US Non-Farm Payrolls and CPI releases. Technical indicators show USD/JPY targeting the 150.50 support zone, with resistance now established at 152.50. The yen's strength extended across other pairs, with EUR/JPY and GBP/JPY also declining sharply. Traders should monitor upcoming BoJ communications for further directional cues.