• USD/JPY has made a recovery move from 134.00 despite an acceleration in Japan’s Inflation.
• Annual headline CPI has accelerated to 3.2% vs. 2.6% and core CPI has jumped to 3.8% against estimates of 3.4%.
• It seems that the BoJ is well on track to keep the inflation rate steadily above 2%.

The USD/JPY pair has defended the crucial support of 134.00 in the Asian session despite the release of wider-than-anticipated Japan’s National Consumer Price Index (CPI) data. Annual national CPI (March) has accelerated to 3.2% from the consensus of 2.6% but remained lower than the prior release of 3.3%.

A marginal decline in headline CPI from prior figures is the outcome of declining oil prices in the international market. The core PCI that strips off the impact of volatile oil and food prices has jumped to 3.8% vs. the estimates of 3.4% and the former release of 3.5%. This indicates a sign of a consistent jump in retail demand, supported by the continuation of ultra-loose monetary policy and stimulus for raising wages.

This indicates that the Bank of Japan (BoJ) is well on track of keeping the inflation rate steadily above 2%. Earlier, BoJ Governor Kazuo Ueda cited that the central bank is expected to attain steady consumer prices above 2% in 2025.

On Thursday, Reuters reported that the BoJ is open to mulling over the idea of making adjustments to its controversial bond yield control policy later this year. Sources familiar to the BoJ also cited “The preferred approach, for now, is to stay the course, which means the bank will make no major immediate changes to YCC and its dovish policy guidance.”

Meanwhile, the US Dollar Index (DXY) is showing topsy-turvy moves around 101.80 amid anxiety ahead of preliminary S&P PMI data. The street is anticipating Manufacturing PMI at 49.0, lower than the former release of 49.2. The Services PMI is also seen lower at 51.5 against the figure of 52.6 released earlier.