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Daily Pivots: (S1) 212.40; (P) 213.25; (R1) 214.88; More...

Intraday bias in GBP/JPY stays neutral as consolidations from 214.83 continues. Deeper pullback cannot be ruled out. But in case of another fall, downside should be contained by 38.2% retracement of 197.47 to 214.83 at 208.19 to bring rebound. Meanwhile, firm break of 214.83/98 will extend larger up trend to 220.90 projection level next.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. On the downside, break of 205.30 resistance turned support is needed to indicate medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.

Last week’s hectic trading ended with a rebound in technology stocks and Bitcoin. Optimism spilled across most assets that are trading on sentiment these days, including gold and silver.

Nvidia, for example, jumped nearly 8% and pushed the Dow above the 50’000 mark for the first time in history — with no major news on the wire other than CEO Jensen Huang saying, “to the extent that people continue to pay for AI and AI companies are able to generate a profit from that, they’re going to keep on doubling, doubling, doubling.”

Fair enough. But what about capacity constraints? What about the speed of demand growth potentially lagging investments that could become obsolete faster than the depreciation rates used on Big Tech balance sheets? And what about circular deals? What happens if a key customer like OpenAI misses a payment?

The point is this: markets rebounded on Friday after a chaotic week, but the fundamental questions that keep investors up at night remain firmly in place. Last week, Amazon, Google, Meta and Microsoft announced plans to spend around $650–700 billion on AI-related investments in 2026, mostly in data centers, AI infrastructure, chips and computing capacity, as they race to dominate the AI era. That figure is far higher than earlier estimates and will flow straight into the pockets of enablers such as Nvidia, AMD, memory chipmakers and data center operators. Yet for the big spenders, a portion of this outlay seems to be a show-off — to signal dominance to others in the AI race rather than being fundamentally justified.

And big gains — like the ones we saw last Friday — can be just as unsettling as big losses. Both signal markets navigating agitated waters, where moves may not prove sustainable.

The good news is that Japanese Prime Minister Sanae Takaichi won — and won big — her bet in the weekend snap election. She pulled off a stunning victory, with her ruling Liberal Democratic Party (LDP) scoring a historic landslide and securing a two-thirds supermajority in the powerful lower house of parliament — even more if you include its coalition partner. That gives her party its most dominant position in decades and a strong mandate to push through an expansive fiscal agenda, particularly benefiting defense and technology. This likely helps explain why South Korea’s Kospi rebounded nearly 4% today. Still, the tech rebound could face speed bumps ahead.

Across Japanese markets, JGB yields jumped at the open, with the 10-year returning to the highest levels in a week on fiscal spending concerns. The Nikkei and Topix also jumped at the open, both hitting fresh record highs on growth and fiscal optimism, but the Nikkei later gave back most early gains — likely reflecting rising yield pressure and concerns that growth may come at a cost. The Topix, by contrast, is holding on to gains, up more than 2% at the time of writing.

The yen gapped lower at the open but quickly retraced losses, suggesting currency traders are leaning toward the idea that the Bank of Japan (BoJ) would not hesitate to act if inflation runs too hot under such an expansive fiscal plan. As a result, the yen’s rebound may look like a brief honeymoon — or a bout of day-dreaming — before the reality of fiscal spending sinks in for a country whose ambitions may be running ahead of its wallet.

Away from Japan, the dollar index kicks off the week under renewed selling pressure, partly due to gains in the yen, gold and silver. The USDCHF continues to push lower after forming solid resistance earlier this month and remains one of the few assets left in the traditional safe-haven space.

Bitcoin is consolidating near the $70’000 mark this morning after successfully building support near $60’000 during last week’s slump. Still, it is hard to say whether the worst is behind us. The rebound since Friday has not even reached the minor 23.6% Fibonacci retracement of the October-to-last-week selloff, which sits near $77’000. For now, Bitcoin remains in a bearish consolidation phase.

With Big Tech earnings and spending announcements now behind us, the week ahead may see markets digest the news, reprice expectations and consolidate — barring surprise headlines from any direction. Coca-Cola, McDonalds and Cisco are among the big names that will go to the earnings confessional.

On the geopolitical front, US crude has returned to its 200-day moving average after weekend talks between the US and Iran were described as “very good” by the US President. Whether that is enough to justify easing tensions and keep oil in a bearish trend — below $64 per barrel, the 38.2% Fibonacci retracement of the summer 2025 slide — remains to be seen. Risks remain two-sided.

On the data front, the week’s agenda is packed with key US releases, including jobs data due Wednesday and inflation figures on Friday. Expectations point to continued softening in labour markets alongside easing inflation — the ideal combination for Federal Reserve (Fed) doves.

In the absence of major data elsewhere, the US dollar is likely to remain in the driver’s seat for FX markets. Major currencies start the week higher, with the EUR/USD and cable both gaining, though support from European Central Bank (ECB) and Bank of England (BoE) policy outlooks remains uncertain. In the UK in particular, expectations that the BoE is close to a rate cut should cap upside.

The AUD/USD is back above the 70-cent level and could extend toward 0.72 on divergence between Reserve Bank of Australia (RBA) and Fed outlooks — a move that would officially mark the end of the 2021–2025 downtrend. The AUD/JPY — one of the market’s favourite carry trades — hit a fresh record high this morning. Despite rising JGB yields and hawkish BoJ bets, rate differentials remain attractive for a further extension of the bullish trend.

The key risk is a direct FX intervention from Japanese authorities, who remain deeply concerned about the yen’s rapid depreciation and its impact on household purchasing power.

Daily Pivots: (S1) 184.76; (P) 185.28; (R1) 186.21; More...

Intraday bias in EUR/JPY stays neutral for the moment. Price actions from 186.86 are developing in to a near term consolidation pattern. On the downside, below 184.26 support will bring another fall as the third leg. But downside should be contained by 38.2% retracement of 172.24 to 186.86 at 181.27 to bring rebound. On the upside, decisive break of 186.86 will resume larger up trend.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Upside momentum has been diminishing as seen in bearish divergence condition in D MACD. But there is not clear sign of topping yet. On resumption, next target is 78.6% projection of 124.37 to 175.41 from 154.77 at 194.88 next. Meanwhile, outlook will stay bullish as long as 55 W EMA (now at 174.22) holds, even in case of deep pullback.

Japan dominated the Asian session as markets reacted to Prime Minister Sanae Takaichi’s decisive election victory over the weekend. The scale of the win, which delivered a supermajority in parliament, triggered a powerful relief rally in domestic equities and set the tone for the broader region. Nikkei surged to a fresh record above 57,000 before trimming some gains, but it continues to hold the bulk of the move. That momentum spilled across the region, lifting Asian equities broadly.

The move was also supported by improving global sentiment after US markets showed renewed resilience late last week. DOW surged to a new record above 50,000 last Friday, signaling that concerns over AI-driven disruption and capex excess have not derailed the broader bull market. With US equities regaining their footing, risk appetite in Asia found an additional tailwind.

Despite the equity surge, Yen’s initial selloff was restrained. Rather than extending sharply lower, the currency stabilized and even firmed modestly as the session progressed, reflecting traders’ sensitivity to renewed intervention risk.

Japanese officials were quick to step up verbal warnings. Finance Minister Satsuki Katayama reiterated over the weekend that authorities stand ready to engage markets to stabilize the Yen, stressing that Japan retains the right to intervene against moves that deviate from fundamentals. Katayama also confirmed close coordination with US Treasury Secretary Scott Bessent, reinforcing the credibility of Japan’s warnings.

That message was echoed today by top currency diplomat Atsushi Mimura, who said authorities were watching FX developments “with a high sense of urgency.” Chief Cabinet Secretary Minoru Kihara added to the chorus, voicing concern over one-sided currency moves. The coordinated messaging appears to have been effective in discouraging aggressive Yen selling, at least for now.

In currency markets, Yen emerged as the strongest performer of the day so far, followed by Aussie and Euro. On the other side, Dollar lagged the most, followed by Sterling and Kiwi, while Swiss Franc and Loonie traded more neutrally. Looking ahead, attention will shift quickly to a heavy US data slate, headlined by the delayed non-farm payrolls report and January CPI. Those releases will determine whether the current rebound in risk sentiment has legs.

In Asia, Nikkei rose 4.22%. Hong Kong HSI is up 1.71%. China Shanghai SSE is up 1.26%. Singapore Strait Times is up 0.50%. Japan 10-year JGB yield is up 0.055 at 2.289.

Nikkei celebrates Takaichi landslide, USD/JPY faces post-election reality check

Japan enters the week riding a powerful post-election wave after equities surged to fresh record highs. Nikkei jumped above 57,000 following Prime Minister Sanae Takaichi’s historic election victory. Although the index has since retreated modestly, it is still holding on to the bulk of its gains, up nearly 4.5% on strong domestic risk appetite.

Takaichi’s win was historic in scale. Her Liberal Democratic Party captured 315 seats in the lower house, its strongest showing ever, and together with coalition partner Ishin now controls 351 seats. That gives the ruling bloc a two-thirds supermajority, allowing it to override the upper house and advance legislation with unprecedented ease.

That supermajority significantly strengthens Takaichi’s hand. It opens the door not only to aggressive fiscal measures but also to constitutional changes, while easing the path for defense spending increases amid a more challenging global environment. For equity investors, political uncertainty has collapsed, and policy execution risk has been sharply reduced.

Yen, however, has not followed equities in a straight line. USD/JPY initially jumped at the Asian open but quickly retreated. Traders remain alert to the risk of intervention should the Yen weaken too sharply, limiting follow-through on election-driven selling. This leaves currency markets in wait-and-see mode. With the election result now fully realized, the question is whether Yen selling momentum can re-emerge as focus shifts back to fiscal expansion, or whether the pair has already priced in the bulk of the political shock.

Technically, momentum is already showing signs of fatigue. USD/JPY’s 4H MACD is falling below its signal line, indicating that the rebound from 152.07 is losing steam. That move is viewed as the second leg of a broader corrective pattern from 159.44. While further gains remain possible as long as 155.51 holds, strong resistance is expected near 159.44 high. A clear break below 155.51 would argue that the third leg of the correction is already underway, reopening the path back toward the 152.07 support ahead.

Japan's nominal pay accelerates to 2.4% in December, but real wages still negative

Japan’s real wages fell -0.1% yoy in December, marking the 12th consecutive monthly decline, though the contraction was the smallest seen in 2025. While the pace of erosion is clearly slowing, the data underline how inflation continues to outpace pay gains for households.

Nominal wages rose 2.4% yoy, extending a 48-month streak of increases, but the outcome fell short of expectations for a 3.0% rise. The acceleration from November’s 1.7% growth points to improving momentum, but not yet at a pace sufficient to deliver sustained real income gains.

Breaking down the components, base salaries rose 2.2% yoy, picking up from November's 1.7% yoy. Overtime pay increased 0.9%, slightly slower than the prior month's 1.2%. Special payments, largely winter bonuses, rose 2.6% up from 1.5%.

Attention now shifts firmly to the upcoming spring wage negotiations. The key questions are whether large firms can again deliver pay hikes above 5% for the third straight years, and whether those gains finally spill over to smaller companies.

Gold eyes 5,300 after surviving shakeout, but longer-term reset will take more time

After two volatile weeks, Gold appears to have regained its footing. Prices have stabilized around the 4,400 area and have since pushed back above 5,000, signalling that the first wave of profit taking has likely run its course. The sharp pullback from the record high was forceful, but the subsequent price action suggests sellers have become less aggressive, opening room for a tradable rebound in the near term.

Technically, the decline from 5,598.38 to 4,403.34 is seen as the initial phase of a broader medium-term correction. That phase now appears complete. Price action since 4,403.34 marks the second phase of this corrective process, which can unfold in a more complex and time-consuming manner rather than a simple straight-line rebound.

For short-term traders, the outlook is constructive. The exhaustion of the initial profit-taking wave raises the prospect of further upside in the near term. As long as pullbacks remain contained, momentum favours additional gains before sellers re-emerge in force.

In this context, 4,654.49 serves as the key tactical line. Any near-term dip should be contained above this level. On the upside, decisive break of 5,091.73 would open the way toward 100% projection of 4,403.34 to 5,091.73 from 4,654.59 at 5,342.98. . That level is a natural target for the current rebound and represents the upper boundary of what short-term traders should reasonably expect from this phase.

However, strength into the 5,340–5,598 zone is likely to attract another round of profit taking, particularly from longer-term holders. That supply should cap near-term upside and prevent Gold from immediately resuming its larger bull trend.

For long-term investors, patience is essential. The current rebound is not viewed as a trend resumption but as part of a broader consolidation correcting the entire advance from 1,614.50 (2022 low). While the long-term structure remains bullish, the market still needs time to absorb prior gains.

Any deeper pullback is expected to find stronger demand near the 4,000–4,400 accumulation zone, reinforced by 38.2% retracement of 1,614.60 to 5,598.38 at 4,076.57. Until fresh catalysts emerge, that area is the preferred zone for rebuilding long positions ahead of the next major uptrend, likely months rather than weeks away.

Delayed US jobs report to drive the next shift in Fed pricing

The week is set to be dominated by US economic data, with markets focused on the delayed January non-farm payroll report and January CPI. While both releases speak directly to the Fed’s mandate, it is the labor market that will ultimately shape near-term policy expectations.

The payroll report, postponed by several days due to the temporary government shutdown, arrives after a volatile stretch for risk assets. Last week’s tech-sector rout briefly lifted expectations for a March rate cut, but that shift has already begun to unwind. A hold at the March FOMC meeting remains the central scenario. The late-week recovery in equities, capped by a record close in DOW, has eased pressure on policymakers to act quickly.

Markets remain more confident about easing later in the year. The June meeting is firmly in focus, with roughly a three-in-four chance priced for a cut to the 3.25–3.50% range.

Inflation data this week will be watched closely but is unlikely to prove decisive unless it shows renewed and persistent acceleration. Fed officials have repeatedly stressed that tariff-related price pressures should be temporary, reducing the risk of overreaction to modest upside surprises.

The labor market, however, presents a different risk profile. Signs of a sharp slowdown in hiring would be harder to dismiss and could prompt renewed discussion around more insurance cuts. This imbalance sets up asymmetric market reactions, with downside surprises in jobs likely to move pricing more than upside inflation shocks.

In the UK, GDP figures will attract growing attention after the BoE's surprising dovish hold last week. Markets have become increasingly confident that a March rate cut is possible, putting incoming data under greater scrutiny. The UK economy struggled for momentum at the end of 2025, and policymakers are now assessing whether fiscal measures from the Autumn Budget have meaningfully lifted activity. The durability of any such support into early 2026 remains an open question.

With the committee deeply split, marginal data surprises could easily tip the balance ahead of the March meeting. Growth data that disappoints would reinforce the case for easing, while resilience could embolden the more cautious camp.

Beyond the US and UK, secondary releases including Eurozone Sentix confidence, Swiss CPI, and China’s inflation data will provide additional color on global demand conditions, but they are likely to play a supporting role in a week dominated by US labor market risk.

Here are some highlights for the week:

• Monday: Japan average cash earnings; Swiss SECO consumer climate; Eurozone Sentix investor confidence.
• Tuesday: Australia Westpac consumer sentiment; Australia NAB business confidence; US retail sales, import prices, employment cost index.
• Wednesday: China CPI, PPI; US non-farm payrolls; BoC deliberations.
• Thursday: Japan PPI; UK GDP, production, trade balance; US jobless claims.
• Friday: New Zealand BNZ manufacturing; New Zealand inflation expectations; Swiss CPI; Eurozone GDP revision, trade balance; US CPI.

EUR/JPY Daily Outlook

Daily Pivots: (S1) 184.76; (P) 185.28; (R1) 186.21; More...

Intraday bias in EUR/JPY stays neutral for the moment. Price actions from 186.86 are developing in to a near term consolidation pattern. On the downside, below 184.26 support will bring another fall as the third leg. But downside should be contained by 38.2% retracement of 172.24 to 186.86 at 181.27 to bring rebound. On the upside, decisive break of 186.86 will resume larger up trend.

In the bigger picture, up trend from 114.42 (2020 low) is in progress. Upside momentum has been diminishing as seen in bearish divergence condition in D MACD. But there is not clear sign of topping yet. On resumption, next target is 78.6% projection of 124.37 to 175.41 from 154.77 at 194.88 next. Meanwhile, outlook will stay bullish as long as 55 W EMA (now at 174.22) holds, even in case of deep pullback.

It was a strong week for equities, with the Dow moving above 50,000 and the Nikkei 225 jumping after Sanae Takaichi secured a clear majority. Improved political clarity in Japan helped lift market sentiment.

Gold started the week lower as selling continued from the previous period of volatility. However, once market pressure eased, buyers returned and prices moved back toward the $5,000 level. Bitcoin, in contrast, had a weak week, as speculators sold following its recent poor performance, raising doubts about its role as an alternative asset.

There were few major economic data releases. U.S. employment data was delayed to this week, while U.S. manufacturing data surprised to the upside. The Bank of England and the ECB both kept interest rates unchanged, while the Australian central bank raised rates by 0.25%.

Markets This Week

U.S. Stocks

Technology stocks were under pressure, but the Dow finished the week strongly above 50,000 as investors bought large, established companies. The U.S. economy remains stronger than expected, and lower interest rates continue to support these stocks. Despite the Dow reaching record highs, the uptrend is not very strong, so short-term traders may find better opportunities in range trading. Medium-term traders may still look for higher levels and consider buying on dips. Resistance is seen at 50,500, 51,000, 51,500, and 52,000, while support is at 49,500, 48,500, and 48,000.
Japanese Stocks

Japanese stocks reacted positively to Takaichi’s victory and her party securing a majority, as markets expect continued government support for the economy and a weaker yen. In the short term, the market looks overbought, so some pullback or sideways movement is possible. However, once this consolidation is complete, the medium-term outlook remains positive as policies aimed at supporting growth are expected to continue. Resistance is seen at 59,000円, 60,000円, and 61,000円, while support is located at 55,000円, 54,000円, 53,000円, and 52,000円.

USD/JPY

USD/JPY had a strong week as traders bought the pair ahead of the expected election victory by Takaichi. Recent comments from Takaichi suggesting she is not opposed to a weaker yen supported further buying. However, the market is now trading close to recent highs, where the risk of Bank of Japan intervention increases. As a result, the pair may move sideways in the near term as gains are consolidated. Resistance is seen at 158, 159, 159.5, and 160, while support is located at 155, 154, 153, and 152.

Gold

Gold saw further stop-loss selling on Monday as panic selling continued, but prices recovered through the rest of the week as investors continued to value gold highly amid elevated geopolitical risks and concerns over government finances. Volatility remained high, with the $5,000 level acting as key resistance. Technical indicators now point to sideways movement, and with gold still up more than 10% this year, range trading may be the preferred approach in the near term. Resistance is seen at $5,050, $5,100, $5,200, $5,500, and $5,600, while support is located at $4,800, $4,650, $4,600, and $4,500.

Crude Oil

WTI crude continued to test higher levels last week but failed at resistance as tensions in Iran eased. The weekly close below the 10-day moving average suggests the recent uptrend has paused for now. As a result, the market may move lower, with prices likely to trade in the $66.50 to $60 range in the near term. Resistance is seen at $66.50, $70, and $75, while support is located at $60, $55, and $50.

Bitcoin

Bitcoin fell sharply last week as speculators sold after being disappointed with its recent performance compared to gold, leading some to question its role in the financial system. Prices rebounded quickly from the $60,000 area, as many investors still believe in Bitcoin, noting that large drops in the past have often been followed by strong gains. However, as long as Bitcoin remains below the 10-day moving average, the short-term bias remains lower. A move back above the 10-day moving average could trigger a sharp rebound. Resistance is seen at $75,000, $80,000, $85,000, and $95,000, while support is located at $65,000, $60,000, and $55,000.

This Week’s Focus

• Monday: Japan Current Account
• Tuesday: U.S. Retail Sales
• Wednesday: China CPI and PPI, U.S. Nonfarm Payrolls
• Thursday: U.K. GDP, Industrial Production and Trade Balance, U.S. Existing Homes Sales
• Friday: E.U. GDP and Trade Balance, U.S. CPI

Japanese markets are set to be in focus following the Takaichi government securing a majority, with attention turning to yen weakness and its impact on equities. In the U.S., retail sales and employment data are the key events this week and are likely to influence all major markets. Gold and Bitcoin will also be closely watched as both attempt to recover recent losses amid ongoing volatility.

After two volatile weeks, Gold appears to have regained its footing. Prices have stabilized around the 4,400 area and have since pushed back above 5,000, signalling that the first wave of profit taking has likely run its course. The sharp pullback from the record high was forceful, but the subsequent price action suggests sellers have become less aggressive, opening room for a tradable rebound in the near term.

Technically, the decline from 5,598.38 to 4,403.34 is seen as the initial phase of a broader medium-term correction. That phase now appears complete. Price action since 4,403.34 marks the second phase of this corrective process, which can unfold in a more complex and time-consuming manner rather than a simple straight-line rebound.

For short-term traders, the outlook is constructive. The exhaustion of the initial profit-taking wave raises the prospect of further upside in the near term. As long as pullbacks remain contained, momentum favours additional gains before sellers re-emerge in force.

In this context, 4,654.49 serves as the key tactical line. Any near-term dip should be contained above this level. On the upside, decisive break of 5,091.73 would open the way toward 100% projection of 4,403.34 to 5,091.73 from 4,654.59 at 5,342.98. . That level is a natural target for the current rebound and represents the upper boundary of what short-term traders should reasonably expect from this phase.

However, strength into the 5,340–5,598 zone is likely to attract another round of profit taking, particularly from longer-term holders. That supply should cap near-term upside and prevent Gold from immediately resuming its larger bull trend.

For long-term investors, patience is essential. The current rebound is not viewed as a trend resumption but as part of a broader consolidation correcting the entire advance from 1,614.50 (2022 low). While the long-term structure remains bullish, the market still needs time to absorb prior gains.

Any deeper pullback is expected to find stronger demand near the 4000–4400 accumulation zone, reinforced by 38.2% retracement of 1,614.60 to 5,598.38 at 4,076.57. Until fresh catalysts emerge, that area is the preferred zone for rebuilding long positions ahead of the next major uptrend, likely months rather than weeks away.

Key Highlights

• EUR/USD dipped below 1.1900 and tested the 1.1780 support.
• It cleared a key bearish trend line with resistance at 1.1810 on the 4-hour chart.
• GBP/USD could start another increase if it climbs above 1.3720.
• Gold prices remain stable above $4,800 and might eye another increase.

EUR/USD Technical Analysis

The Euro started a fresh decline from 1.2080 against the US Dollar. EUR/USD dipped below 1.1950 and 1.1900 before the bulls appeared.

Looking at the 4-hour chart, the pair tested the 61.8% Fib retracement level of the upward move from the 1.1577 swing low to the 1.2082 high. The pair remained stable above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

The pair is stable above 1.1780 and recently cleared a key bearish trend line with resistance at 1.1810. On the upside, the pair could face hurdles near 1.1850.

The next stop for the bulls might be 1.1890. A close above 1.1890 could open the doors for more gains. In the stated case, the bulls could aim for a move toward 1.1920. Any more gains could set the pace for a fresh move to 1.2000.

Immediate support could be 1.1780. The first major area for the bulls might be near 1.1720. The main support sits at 1.1700, below which the pair might gain bearish momentum. In the stated case, it could even revisit 1.1650.

Looking at GBP/USD, the pair is stable above 1.3500 and might soon aim for a fresh increase if it clears the 1.3720 resistance.

Upcoming Key Economic Events:

• Euro Zone Sentix Investor Confidence for Feb 2026 - Forecast -1.8, versus -1.8 previous.

Japan enters the week riding a powerful post-election wave after equities surged to fresh record highs. Nikkei jumped above 57,000 following Prime Minister Sanae Takaichi’s historic election victory. Although the index has since retreated modestly, it is still holding on to the bulk of its gains, up nearly 4.5% on strong domestic risk appetite.

Takaichi’s win was historic in scale. Her Liberal Democratic Party captured 315 seats in the lower house, its strongest showing ever, and together with coalition partner Ishin now controls 351 seats. That gives the ruling bloc a two-thirds supermajority, allowing it to override the upper house and advance legislation with unprecedented ease.

That supermajority significantly strengthens Takaichi’s hand. It opens the door not only to aggressive fiscal measures but also to constitutional changes, while easing the path for defense spending increases amid a more challenging global environment. For equity investors, political uncertainty has collapsed, and policy execution risk has been sharply reduced.

Yen, however, has not followed equities in a straight line. USD/JPY initially jumped at the Asian open but quickly retreated. Traders remain alert to the risk of intervention should the Yen weaken too sharply, limiting follow-through on election-driven selling. This leaves currency markets in wait-and-see mode. With the election result now fully realized, the question is whether Yen selling momentum can re-emerge as focus shifts back to fiscal expansion, or whether the pair has already priced in the bulk of the political shock.

Technically, momentum is already showing signs of fatigue. USD/JPY’s 4H MACD is falling below its signal line, indicating that the rebound from 152.07 is losing steam. That move is viewed as the second leg of a broader corrective pattern from 159.44. While further gains remain possible as long as 155.51 holds, strong resistance is expected near 159.44 high. A clear break below 155.51 would argue that the third leg of the correction is already underway, reopening the path back toward the 152.07 support ahead.

Japan’s real wages fell -0.1% yoy in December, marking the 12th consecutive monthly decline, though the contraction was the smallest seen in 2025. While the pace of erosion is clearly slowing, the data underline how inflation continues to outpace pay gains for households.

Nominal wages rose 2.4% yoy, extending a 48-month streak of increases, but the outcome fell short of expectations for a 3.0% rise. The acceleration from November’s 1.7% growth points to improving momentum, but not yet at a pace sufficient to deliver sustained real income gains.

Breaking down the components, base salaries rose 2.2% yoy, picking up from November's 1.7% yoy. Overtime pay increased 0.9%, slightly slower than the prior month's 1.2%. Special payments, largely winter bonuses, rose 2.6% up from 1.5%.

Attention now shifts firmly to the upcoming spring wage negotiations. The key questions are whether large firms can again deliver pay hikes above 5% for the third straight years, and whether those gains finally spill over to smaller companies.