USD/JPY: BoJ rate hike prospects drive yen rally as wage growth accelerates

USD/JPY declined 0.7% to 151.35 as strengthening Japanese wage momentum significantly increased the probability of a Bank of Japan rate hike at the December 19 meeting. November's wage data showed a robust 3.0% year-over-year increase, surpassing the 2.6% forecast and marking the highest growth rate in eight months. This development aligns with the BoJ's conditions for policy normalization, with Governor Ueda previously emphasizing the importance of sustained wage-price dynamics. Market pricing now reflects a 70% chance of a 25-basis-point hike next week, up from 40% a week ago. Technical analysis shows USD/JPY breaking below the 152.00 support level, with next targets at 150.80 and 150.00. The pair faces resistance at 152.50-153.00. Traders should monitor upcoming BoJ communications and Japan's December Tankan survey for additional policy clues.