USD/JPY juggles around 132.70 ahead of Japan’s GDP, US Inflation in focus

• USD/JPY is auctioning rangebound as investors await Japan’s GDP numbers.
• A subdued performance is expected from Japan’s GDP.
• This week the investing community is focusing on the US inflation as it will dictate the likely action by the Fed.

The USD/JPY pair is oscillating in a narrow range of 132.33-133.01 as investors are awaiting the release of the Gross Domestic Product (GDP) numbers by the Japanese Cabinet Office in the Asian session. The asset has remained stronger in the last two trading weeks after sensing a rebound near the round-level support of 127.00.

The uncertainty over the release of Japan's GDP has sidelined the market participants. A preliminary estimate for the quarterly GDP is -0.3% vs. the prior print of -0.2%. While the annualized GDP is expected to remain unchanged at -1%. A higher-than-expected GDP figure is going to strengthen the Japanese bulls.

Meanwhile, the US dollar index (DXY) is expected to register more downside amid an improvement in the risk appetite of investors. A round in the positive market sentiment has underpinned the risk-sensitive currencies and eventually has diminished the DXY’s appeal.

This week, the major event is the US Consumer Price Index (CPI), which will release on Friday. The annual US CPI figure is seen at 8.3%, similar to its previous print while the core CPI could trim to 5.9%. The deadly duo of the upbeat US Nonfarm Payrolls (NFP) and elevated inflationary pressures are bolstering the odds of an extreme hawkish stance by the Federal Reserve (Fed) in its monetary policy announcement next week. It is worth noting that the US economy reported the US NFP at 390k, much higher than the forecasts of 325k.