USD/JPY shows signs of weakness above 134.00 ahead of US GDP, BoJ policy in focus

• USD/JPY is looking vulnerable above 134.00 as the recovery move by the BoJ seems sort-lived.
• An upbeat Durable Goods Orders data would indicate that core CPI would get more persistent ahead
• BoJ Ueda said it is appropriate to continue with easing yield curve control.

The USD/JPY pair seems vulnerable above the critical support of 134.00 in the early European session. The major is witnessing selling pressure as the recovery move in the US Dollar Index (DXY) is expected to fade sooner. Earlier, the USD Index rebounded after printing a weekly low of 101.20. An absence of supportive indicators conveys that the recovery move in the USD Index is short-lived.

S&P500 futures are auctioning in a negative trajectory in the early European session in anticipation of weak earnings and poor guidance from technology stocks. Investors have underpinned the risk aversion theme and are shifting funds in US government bonds.

This week, investors are awaiting the release of the Durable Goods Orders data for further guidance. The economic data indicates forward demand received by manufacturers for curable products. US core Consumer Price Index (CPI) data has not softened much if compared with headline inflation. And an upbeat Durable Goods Orders data would indicate that core CPI would get more persistent ahead. As per the consensus, the economic data is seen expanding by 0.8% vs. a contraction of 1.0% recorded in February.

On the Japanese Yen front, the interest rate policy from the Bank of Japan (BoJ) will remain in focus. New BoJ Governor Kazuo Ueda is expected to continue the expansionary monetary policy further to support gradually accelerating inflation. Speaking in Parliament, BoJ Ueda said it is appropriate to continue with easing yield curve control (YCC).

Meanwhile, the monthly economic report published by the Japanese Cabinet Office maintained the overview of the economy that it was on a moderate recovery.