USD/JPY Recovers From 134.00 Despite The Acceleration Of Japan's Inflation

Despite the publication of wider-than-anticipated Japan's National Consumer Price Index (CPI) data, the USD/JPY pair defended the crucial support of 134.00 during the Asian session. Annual national CPI (March) increased to 3.2% from the consensus estimate of 2.6%, but remained below the previous release of 3.3%.

The decline in oil prices on the international market has resulted in a slight decrease in the headline CPI compared to previous figures. The core PCI, which excludes the impact of volatile energy and food prices, has increased to 3.8% from 3.4% and 3.5%, respectively. This is evidence of a consistent increase in retail demand, supported by the persistence of ultra-loose monetary policy and wage-growth stimuli.

This suggests that the Bank of Japan (BoJ) is on course to maintain an inflation rate above 2%. Governor Kazuo Ueda of the Bank of Japan previously stated that the central bank anticipates achieving stable consumer prices above 2% in 2025.

Reuters reported on Thursday that the Bank of Japan is considering modifying its controversial bond yield control policy later this year. According to sources familiar with the BoJ, "The preferred approach, for now, is to stay the course, which means the bank will not make any immediate major changes to YCC and its dovish policy guidance."

In the meantime, the US Dollar Index (DXY) is fluctuating erratically around 101.80 in anticipation of provisional S&P PMI data. The consensus estimate for Manufacturing PMI is 49.0, down from the previous reading of 49.9. The Services PMI is anticipated to decrease to 51.5 from 52.6 previously reported.