- USD/JPY is trading in a range during the first half of the European session on Tuesday.
- The mixed technical picture prevents investors from opening aggressive directional positions.
- In addition, investors appear to be awaiting the latest US CPI consumer inflation numbers on Wednesday.
The USD/JPY pair has no clear direction on Tuesday, oscillating between tepid gains and small losses during the first half of the European session. At time of writing the pa hovers around 130.15, slightly lower on the day.
A continued pullback in US Treasury yields kept dollar bulls on the defensive and acted as a USD/JPY headwind. However, risk appetite weighed on the safe-haven Japanese yen and offered some support to the USD/JPY pair.
Overall, the previous day’s pullback from a fresh two-decade high around the 131.35 area constitutes the formation of a bearish double top pattern on the short-term charts. However, the corrective move stopped near an uptrend line from two weeks ago.
Such support, currently in the 129.75-129.70 area, coincides with the daily low and should serve as a reference point for intraday investors. A convincing break below this region would suggest that the USD/JPY pair has formed a short-term top and pave the way for further losses.
USD/JPY could accelerate the decline towards the test of the 100-period SMA on the 4-hour chart around the 129.00 round level. The downside move could extend towards the 128.25-128.20 area towards the 128.00 level and the 127.70-127.65 support.
On the other hand, the 130.70-130.75 region seems to act as immediate resistance ahead of the 131.00 level. Continuation buying should allow the USD/JPY pair to rally back to a two-decade high around the 131.35 area touched on Monday.
USD/JPY 1 hour chart
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USD/JPY additional levels
Source: Fx Street
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