USD/JPY observes selling pressure on stronger yen.

The USD/JPY pair has witnessed a slight rebound after hitting 128.00 low late during the US trading session. The pair has faced decent selling pressure on Wednesday despite a broader strength in the US dollar. The heightened risk-off impulse in the market is behind the dollar against the majority of risk-sensitive currencies. The Japanese yen has shown strength against the dollar, which indicates that yen bulls managed to consolidate their gains.

The Japanese economy has yet not recovered its growth rate that could match its pre-pandemic levels. Therefore, the Bank of Japan will continue with its ultra-loose monetary policy. Going forward, the weekly major event will be the release of Japan’s inflation on Friday. The annual National Consumer Price Index (CPI) is seen at 1.5% against the prior print of 1.2%. The unavailability of inflationary pressures will push the BOJ to keep infusing liquidity into its economy.

The yen bulls have strengthened against the dollar after displaying less negative Gross Domestic Product (GDP) numbers on Wednesday. The annualized figure for Japan’s GDP remains higher at -1% against the consensus of -1.8%. While the quarterly figure landed at -0.2% remained negative but still outperformed the forecasts of -0.4%.

The US dollar index is auctioning in a tight range below 104.00 amid a light economic calendar this week. The asset has gained significant bids on Wednesday as risk-off impulse soars on mounting price pressures.