• USD/JPY oscillated in a range through the first half of the European session on Tuesday.
• The mixed technical picture held back traders from placing aggressive directional bets.
• Investors also seem to wait for the latest US consumer inflation figures on Wednesday.

The USD/JPY pair lacked any firm direction on Tuesday and seesawed between tepid gains/minor losses through the first half of the European session. The pair was last seen trading around the 130.15 region, nearly unchanged for the day.

The ongoing retracement slide in the US Treasury bond yields kept the US dollar bulls on the defensive and acted as a headwind for spot prices. That said, the risk-on impulse undermined the safe-haven Japanese yen and extended some support to the USD/JPY pair.

Looking at the broader picture, the overnight pullback from a fresh two-decade high, around the 131.35 region, constitutes the formation of a bearish double-top pattern on short-term charts. The corrective slide, however, stalled near a two-week-old ascending trend line.

The said support, currently around the 129.75-129.70 region, coincides with the daily low and should act as a pivotal point for intraday traders. A convincing break below would suggest that the USD/JPY pair has formed a near-term top and pave the way for further losses.

Spot prices could then accelerate the fall towards testing the 100-period SMA on the four-hour chart, around the 129.00 round figure. The downward trajectory could further get extended towards the 128.25-128.20 region en-route the 128.00 mark and the 127.70-127.65 support.

On the flip side, the 130.70-130.75 region now seems to act as an immediate resistance ahead of the 131.00 mark. Some follow-through buying should allow the USD/JPY pair to climb back to over a two-decade high, around the 131.35 region touched on Monday. 

USD/JPY 1-hour chart

Key levels to watch