USD/JPY spikes to 134.00 mark, fresh daily high post-US GDP report

• USD/JPY catches aggressive bids following the release of the Advance US Q1 GDP report.
• The US economic growth decelerated from 2.6% to 1.1% during the first quarter of 2023.
• Traders now look to the BoJ meeting and the US Core PCE Price Index for a fresh impetus.

The USD/JPY pair rebounds over 80 pips from the daily low touched during the early North American session and climbs to the 134.00 mark, a fresh daily high following the release of the US GDP report.

The US Bureau of Economic Analysis reported this Thursday that the economic growth decelerated from 2.6% annualized pace to 1.1% during the January-March period, missing estimates for a reading of 2.0%. That said, the price index component - the Core Personal Consumption Expenditure - rose more than expected, by 4.9% during the reported period and pointed to a further pickup in price pressures, reaffirming bets for another 25 bps lift-off at the next FOMC meeting in May. This remains supportive of a further rise in the US Treasury bond yields, which continues to act as a tailwind for the US Dollar (USD) and lends support to the USD/JPY pair.

The sharp intraday spike could also be attributed to a goodish recovery in the global risk sentiment, which tends to undermine the safe-haven Japanese Yen (JPY). Furthermore, the Bank of Japan's (BoJ) dovish stance is seen weighing on the JPY and contributing to the move up. It, however, remains to be seen if the USD/JPY pair can capitalize on the move or if bulls opt to move to the sidelines ahead of the crucial BoJ policy meeting on Friday. Apart from this,  the Fed's preferred inflation gauge - the US Core PCE Price Index - will play a key role in influencing the USD and help investors to determine the near-term trajectory for the major.

Technical levels to watch