The USD/JPY pair fades a modest intraday uptick to the 134.00 neighbourhood and drops to a one-and-half-week low during the early North American session. The pair is currently placed around the 133.15-133.10 region, down over 0.40% for the day, and is pressured by the heavily offered tone surrounding the US Dollar (USD).

In fact, the USD Index, which tracks the Greenback against a basket of currencies, reverses a major part of the overnight strong gains and is seen weighing on the USD/JPY pair lower. Fresh concerns about the regional banking sector crisis in the US, along with fears of an imminent recession and worries about the US debt ceiling, have been fueling speculations that the Federal Reserve (Fed) will cut interest rates later this year. This, in turn, continues to drag the US Treasury bond yields lower and exerts heavy downward pressure on the Greenback.

That said, the Bank of Japan (BoJ) Kazuo Ueda's dovish remarks earlier this week, along with a modest recovery in the US equity futures, could undermine the safe-haven Japanese Yen (JPY) and lend support to the USD/JPY pair. It is worth recalling that the new BoJ Governor said on Monday that the central bank must maintain monetary easing as trend inflation is still below 2% and added that inflation forecasts must be quite strong and close to 2% in the coming year to consider tweaking yield curve control. This, in turn, warrants caution for bearish traders.

Hence, any subsequent downfall is more likely to find decent support near the 133.00-132.90 region, representing a technically significant 100-day Simple Moving Average (SMA) support. The market focus now shifts to the release of the US Q1 GDP report on Thursday and the US Core PCE Price Index - the Fed's preferred inflation gauge on Friday. This, along with the highly-anticipated BoJ monetary policy meeting, should provide some meaningful impetus and help investors to determine the near-term trajectory for the USD/JPY pair.