• USD/JPY sees a balancing profile above 129.00 as BOJ may keep up the prudent monetary policy.
• Fed Powell has just signaled two more 50 bps rate hikes in CY2022.
• For further guidance, investors will focus on Michigan CSI, which is seen at 64.

The USD/JPY pair is advancing modestly from the early Asian session despite a weak performance from the US dollar index (DXY) has remained weak after printing a fresh 19-year high of 104.92 on Thursday. A bullish open-drive session is claiming an establishment above 129.00 on Friday.

A mild correction from the DXY in early Tokyo was highly expected after a strong run-up on Thursday. Higher-than-expected US Producer Price Index (PPI) numbers fueled the odds of an aggressive policy tightening by the Federal Reserve (Fed). The recent tradition of the DXY to renew 19-year high after a mild correction at regular intervals is expected to continue for a prolonged period as Fed chair Jerome Powell has warned of two more rate hikes by 50 basis points (bps) in Fed’s next two interest rate decision announcements. Also, Fed Powell emphasized the need for price stability as paychecks are losing their value amid soaring inflation.

Meanwhile, yen bulls are witnessing a broader weakness in the Asian session as the Bank of Japan (BOJ)’s Governor has promised a more conservative monetary policy going forward, in his statement on Friday. The Japanese economy has yet not achieved its pre-pandemic growth levels and inflation is still not at par with the targeted levels.

In today’s session, investors will keep an eye on the release of the Michigan Consumer Sentiment Index (CSI). The catalyst is expected to land at 64 against the former figure of 65.2.