USD/JPY faces barricades around 137.00 as investors await Jackson Hole

• USD/JPY is struggling to overstep 137.20 as the focus shifts to Jackson Hole Economic Symposium.
• The DXY may recapture its weekly high at 109.27 on an expectation of hawkish Fed commentary.
• A dismal Japan PMI despite a prudent BOJ policy is a big reason to worry.

The USD/JPY pair is facing barricades around the immediate hurdle of 137.20 in the Asian session. The asset is likely to surpass the immediate barrier as pre-anxiety ahead of Jackson Hole Economic Symposium may underpin the US dollar index (DXY). Earlier, the asset rebounded firmly after printing a low of 135.81 on Tuesday. A decent buying interest near lower levels pushed the asset above 137.00 and more upside seems favored ahead.

The US dollar index (DXY) is aiming to recapture its weekly high at 109.27 as investors are expecting a continuation of the extreme hawkish stance by the Federal Reserve (Fed) chair Jerome Powell. There is no denying the fact that recent evidence of exhaustion in the price pressures has brought a sigh of relief for Fed policymakers. However, the road to achieving price stability is still far from over and the Fed will continue hiking interest rates with similar velocity.

On the Japan front, the downbeat Purchasing Managers Index (PMI) numbers released this week is a big reason to worry. The Bank of Japan (BOJ) is continuously flushing liquidity in the economy to spurt the overall growth. Despite, the continuation of a prudent monetary policy, a contraction in economic activities is worrisome for BOJ policymakers.

It looks like a shift stance by the BOJ will postpone for a prolonged period as a survey by Bloomberg indicates that the BOJ will stick to its loose policy even if inflation hits 3%.