USD/JPY oscillates around a fresh two-decade high at 133.30, US Inflation in focus

• USD/JPY is holding it's two-decade high at 133.30 firmly on advancing hawkish Fed bets.
• A tight labor market and higher inflation may result in a bumper rate hike dictation by the Fed.
• Yen bulls have failed to capitalize on better-than-expected GDP numbers.

The USD/JPY pair is hovering around the fresh two-decade high, which is placed at 133.30 and is recorded in the Asian session. The asset advanced firmly after the US dollar index (DXY) extended its gains amid uncertainty over the release of the US inflation, which is scheduled on Friday. At the press time, the asset is juggling in a narrow range of 133.13-133.29 and is expected to deliver an upside break amid broader strength in the DXY.

The DXY is holding its intraday gains and is expected to recapture Tuesday’s high at 102.83. Investors are seeing the US Consumer Price Index (CPI) stable above 8%, which is sufficient to compel the Federal Reserve (Fed) to dictate a 50 basis point (bps) interest rate hike next week. The odds of a bumper rate hike by the Fed are strengthened, thanks to the upbeat US Nonfarm Payrolls (NFP) and price pressures.

It is worth noting that higher employment opportunities generated by the US economy in May will support the Fed to sound hawkish next week without any concerns. A tight labor market rules out the recession fears and provides more liberty to the Fed to take informed decisions.

On the Tokyo front, the yen bulls have failed to capitalize on better-than-expected Gross Domestic Product (GDP) numbers. Japanese Cabinet Office has reported a significant improvement in the annualized GDP numbers as the figure has improved to -0.5% against the expectations and the former print of -1%.  Also, the quarterly GDP is climbed to -0.1% vs. the forecasts of -0.3% and the prior figure of -0.2%.