USD/JPY faces barricades around 127.00, investors eye on FOMC minutes

• USD/JPY is attracting offers at 127.00 amid broader weakness in the DXY.
• The upbeat Jibun Bank PMI numbers have strengthened the yen bulls.
• The DXY is struggling to climb above 127.00 ahead of FOMC minutes.

The USD/JPY pair is facing selling pressure near the round-level resistance of 127.00 in the early European session. A bullish open-rejection reverse move in early Tokyo drove the asset to an intraday high of 127.21. On a broader note, the asset is declining swiftly after registering a multi-year high of 131.35 on May 9.

The Japanese yen has been underpinned against the greenback on upbeat Jibun bank Purchase Managers Index (PMI) numbers, released on Tuesday. The Manufacturing PMI landed at 53.2, against the forecasts of 52 while the Services PMI was recorded at 51.7, higher in comparison with the estimates of 50.6.

The Bank of Japan (BOJ) is kept on advocating a prudent monetary policy to push the aggregate demand higher. Investors should brace for more quantitative easing ahead as the economy still needs to regain its pre-pandemic growth levels.

Meanwhile, the US dollar index (DXY) is attempting to surpass the crucial resistance of 102.00 as investors are expecting an extremely hawkish context in the Federal Open Market Committee (FOMC) minutes. The FOMC minutes may dictate the ideology of Federal Reserve (Fed) policymakers at times while drafting the monetary policy statement. Also, the market participants will get to know the current economic situation of the US. No doubt, the rising inflationary pressures, and the tight labor market would have compelled the Fed to feature a rate hike by 50 basis points (bps), however, the majority of votes in favor of 75 bps will be the major component to look after.