USD/JPY steadies around 128.50 ahead of Japan’s National CPI

The USD/JPY pair is displaying back and forth moves within a narrow range of 127.82-128.71 since Thursday as investors are awaiting the release of Japan’s National Consumer Price Index (CPI). A yearly preliminary reading is advocating a decent surge in inflation as the economic data is expected to land at 1.3% against the prior print of 0.9%.

No wonder, the price pressures from higher energy bills and commodity prices will lift inflation in Tokyo. But still, they won’t be able to raise hopes of hawkish guidance from the Bank of Japan (BOJ). The growth prospects in Japan have yet not reached their pre-pandemic levels. Therefore, more stimulus will always be expected from their central bank.

On the dollar front, the US dollar index (DXY) has attracted some stellar bids after dropping below the critical support of 100.00. The DXY rebounds firmly after the odds of an aggressive hawkish stance from the Federal Reserve (Fed) in May progressed. It is worth noting that an escalation in the interest rate hike expectations after the speech from Fed’s chair Jerome Powell at the International Monetary Fund (IMF) meeting failed to insert any impact on the asset. Despite a broader weakness in the Japanese yen and a sharp rebound in the US dollar index (DXY), a lackluster performance from the major is indicating that yen is gaining strength now.