USD/JPY tumbles to 150.00 as prospects of BoJ exiting dovish policy stance deepens

• USD/JPY slumps to 150.00, hoping the BoJ will exit the dovish policy stance sooner.
• Japan’s Murai is optimist on a positive cycle of rising growth, improving wage outlook.
• Fed Powell is expected to maintain a hawkish narrative on interest rates.

The USD/JPY pair falls sharply to the psychological support of 150.00 in early American session on Tuesday as hopes of Bank of Japan (BoJ) quitting the decade-long expansionary policy stance have escalated.

In Tuesday's early European session, Japan’s Deputy Chief Cabinet Secretary Hideki Murai said that improving economic and wage prospects are visible.

The BoJ has been postponing its plans of exiting the dovish policy stance as policymakers were less convinced about wage growth being strong enough to keep inflation sustainably above the 2% target. Investors' confidence in the BoJ shifting to policy normalization is improving as the Japanese government is expecting a steady wage growth outlook,

Last week, BoJ board member Hajime Takata said that the central bank’s goal of maintaining inflation above 2% on a sustainable basis is ‘finally in sight.’

Meanwhile, the US Dollar Index (DXY) trades sideways around $103.90 ahead of the United States Institute of Supply Management (ISM) Services PMI for February, which will be published at 15:00 GMT. The Services PMI is forecasted to have dropped to 53.0 from 53.4 in January.

This week, the primary trigger for the US Dollar will be the Federal Reserve Chair Jerome Powell’s testimony before Congress on Wednesday. Fed Powell may reiterate that there is no urgency for rate cuts. The Fed is less likely to reduce interest rates before gaining confidence that inflation will sustainably return to the 2% target.