USD/JPY steadies around 135.00 ahead of BOJ’s minutes, Fed Powell in focus

• USD/JPY is oscillating around 135.00 as investors await the release of the BOJ minutes.
• The DXY is underperforming on soaring market sentiment.
• Fed Powell’s testimony will dictate the likely monetary policy action in July.

The USD/JPY pair is displaying lackluster performance in the Asian session. The asset is juggling in a narrow range of 134.92-135.21 right from the first tick. Usually, an inventory distribution move in the early hours of the trading session calls for an imbalance move in the breakout direction. Considering the broader note, the asset is firmer after a responsive buying move from Thursday’s low at 131.49. Therefore, a bullish imbalance move is more likely.

The market participants are awaiting the release of the Bank of Japan (BOJ)’s June meeting minutes. Traders should be aware of the fact that the BOJ kept a dovish stance on the interest rates. Taking into account, the soaring price pressures due to supply chain disruption and the Russia-Ukraine war, world central banks have elevated their interest rates vigorously. The Swiss National Bank (SNB) has also elevated its lending rates by 50 basis points (bps).

Now, the BOJ is seldom operating on ultra-loose monetary policy to spurt the aggregate demand in the economy. The annual inflation rate in the Japanese economy has climbed above its desired levels. However, the core Consumer Price Index (CPI) is significantly lower due to costly fossil fuels and food prices. It would be worth noting the comments over the core CPI by BOJ’s Kuroda and its Co.

On the dollar front, the US dollar index (DXY) is expected to slip below Monday’s low of 104.23 amid a soaring market mood. The FX domain is keeping an eye on the Federal Reserve (Fed) chair Jerome Powell’s testimony. Fed Powell will dictate the likely monetary policy action for July’s policy.