USD/JPY climbs above 135.00 on dovish BoJ minutes, US Biden-McCarthy meeting in focus

• USD/JPY has jumped sharply above 135.00 as BoJ continues to favor the ultra-dovish policy.
• US President Joe Biden and Republicans are set for US debt ceiling talks on Tuesday.
• A delay in US debt ceiling talks would cost millions of jobs in the US economy.

The USD/JPY pair has jumped above the crucial resistance of 135.00 in the Asian session. The asset has received the attention of buyers amid the release of the dovish Bank of Japan’s (BoJ) April monetary policy meeting minutes.

BoJ members supported the continuation of policy easing in order to achieve steady inflation. While discussing over an exit from the ultra-dovish policy, BoJ members conveyed that the central bank should consider the weight of risk associated with the policy shift stance before consideration. However, one member stated that the BoJ should prioritize the risk of missing the price goal due to a premature policy shift over the risk of shifting policy too late.

Meanwhile, S&P500 futures are showing choppy moves in the Asian session. US equities were the talk of the town on Friday as investors ignores fears of the US banking crisis and debt ceiling issues and only focused on optimism inspired by expectations of a policy-tightening pause by the Federal Reserve (Fed). The overall market mood seems positive amid decent traction for risk-sensitive assets.

The US Dollar Index (DXY) has retreated after a short-lived recovery to near 101.33 as investors are worried about the outcome of a scheduled meeting between US President Joe Biden with Speaker Kevin McCarthy and other congressional leaders on Tuesday. Delegates are expected to negotiate on raising the US debt ceiling as a delay would cost the loss of millions of jobs and economic output. Also, a failure in making obligated payments by US Treasury would affect the long-term outlook of the US economy.

Reuters reported that Scope Ratings placed the USA's AA long-term issuer and senior unsecured debt ratings in local and foreign currency under review for a possible downgrade due to longer-run risks associated with the misuse of the debt ceiling instrument.