USD/JPY eyes 130.00 as focus shifts to Fed’s Powell, BOJ supports policy easing

• USD/JPY is marching towards 130.00 as Fed-BOJ diverges on policy measures.
• The BOJ promised more quantitative easing to spurt the growth rate.
• Fed’s Powell has already hinted at more jumbo rate hikes this year.

The USD/JPY is gradually moving higher and is expected to reclaim the psychological mark of 130.00 as investors are bracing for a hawkish tone from Federal Reserve (Fed)’s chair Jerome Powell on Tuesday. The speech from Fed Powell will put some light on the monetary policy stance by the Fed in its June interest rate announcement.

Fed’s Powell in his interview with the Marketplace national radio program on Friday unexpectedly added the option of two more jumbo rate hikes consecutively in the next policy meetings. Earlier, the street was expecting only one more jumbo rate hike in addition to the 50 basis points (bps) elevation announced in the first week of May. Also, Fed’s Powell emphasized bringing price stability as mounting price pressures are weighing on the paychecks of the households.

Meanwhile, the Japanese yen is facing intense pressure after the Bank of Japan (BOJ) favored more quantitative easing on Friday. BOJ’s Harihuko Kuroda promised conservative monetary policy going forward, in his statement on Friday as the economy has yet not achieved its pre-pandemic growth levels and inflation is still not at par with the targeted levels.

Going forward, the monthly US Retail Sales will be on the radar as investors are seeing it at 0.7% against the former figure of 0.5%. While the Japanese docket will report the Gross Domestic Product (GDP) numbers. The annualized figure is seen at -1.8% while the quarterly numbers are expected at -0.4%.