Higher-than-expected wage deals might increase the likelihood of a March rate hike from the Bank of Japan (BOJ). Japan’s largest union group federation, Rengo, announced that members secured deals averaging 5.28% wage growth, the highest since 1991. Last year, growth was 3.8%. After the announcement, the probability of a March hike did not change much in the swap markets because of Ueda’s comments earlier this week. 

(EURJPY Daily Chart) 

EURJPY has been in a clear uptrend since 2020, and the upward pressure is still ongoing over the long term. However, the possible end of negative rates might provide some relief to JPY bulls. Currently, there is a triangle and ascending wedge formation formed with the same lower line. This line is currently at 160.33 and rising. There are multiple key levels converging around 160, and the lower line is only one of them. The previous horizontal resistance is now acting as support, along with the 100-day moving average and the 61.8% Fibonacci retracement level. This makes 160 a major support level to watch. If EURJPY were to fall due to possible rate hike optimism, this key support level would have to be breached. 

Regarding upward moves, EURJPY is currently testing the 162 resistance. With a possible break, the upper line of the triangle can be targeted once more.