- USD/JPY has witnessed a minor selling pressure around 135.20 on weak DXY.
- The DXY has surrendered the critical support of 104.00 on expectations of weak US Durable Goods Orders.
- The seldom price pressures from oil and food prices do not warrant an overall increase in the inflation rate.
The USD/JPY pair is facing barricades around 135.20 and is expected to display a steep fall after violating the psychological support of 135.00. A downbeat performance from the asset is expected on lower estimates for the US Durable Goods Orders.
Last week, the major witnessed a downside move after failing to sustain near all-time-highs at 136.70. Despite the intentions of the Bank of Japan (BOJ) policymakers to support the ultra-loose monetary policy, the yen bulls gained strength and slipped lower.
The minutes from the BOJ’s monetary policy meeting dictated that the majority of the policymakers were in favor of continuing a prudent monetary policy. The BOJ has achieved the targeted inflation rate at or above 2%, however, the aggregate price pressure is majorly contaminated by the costly oil and food prices. This doesn’t warrant a healthy rise in the inflation rate.
On the US dollar front, the US dollar index (DXY) is declining sharply in the Asian session. The asset has slipped below the round-level support of 104.00 and is expected to slip further on the lower forecast for the US Durable Goods Orders. A preliminary estimate for the economic data is 0.1%, significantly lower than the prior print of 0.5%. A lower-than-expected figure from the economic data will hurt the DXY more as poor economic data will restrict the Federal Reserve (Fed) to remain extremely hawkish on the interest rates.
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