- USD/JPY faded on an intraday bullish spike led by stronger US CPI and pulled back to 130.00.
- The formation of a break below the rising trendline and double top favors the bearish traders.
- Weakness below the 100-period SMA on the 4-hour chart will reaffirm the negative bias.
The pair USD/JPY caught aggressive bets during the early American session and soared to daily highs in reaction to higher-than-expected US consumer inflation numbers. Momentum, however, moderated near the 130.80 region and the subsequent pullback dragged spot prices back closer to the psychological 130.00 level.
Looking at the bigger picture, this week’s pullback from a fresh two-decade high, around the 131.35 region touched on Monday, constitutes the formation of a bearish double top on short-term charts. A subsequent drop below an uptrend line that extends from the end of March could be seen as a new trigger for bearish traders.
The negative outlook is reinforced by the fact that the technical indicators on the hourly charts have just started to slide into bearish territory. Some follow-through selling below the 100-period SMA on the 4hrs chart will reaffirm the bearish bias and pave the way for a significant corrective decline for the USD/JPY pair.
Spot prices could then accelerate the decline towards intermediate support near the 129.35 region before finally falling to the 129.00 round level. The downward trajectory could extend further towards testing the 128.25-128.20 region en route to 128.00 and the 127.70-127.65 support zone.
On the other hand, the 130.70-130.75 region now appears to have emerged as strong immediate resistance ahead of the 131.00 mark. Some follow-up buying would negate the short-term bearish bias and allow the USD/JPY pair to break above the recent high around the 131.35 region and aim to conquer the 132.00 round figure.
4 hour chart
-637878745052326385.png)
Technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
