• USD/JPY faded stronger US CPI-led intraday bullish spike and retreated to the 130.00 mark.
• The formation of a double-top and ascending trend-line breakdown favours bearish traders.
• Weakness below the 100-period SMA on the 4-hour chart will reaffirm the negative bias.

The USD/JPY pair caught aggressive bets during the early North American session and shot to the daily high in reaction to stronger-than-expected US consumer inflation figures. The momentum, however, ran out of steam near the 130.80 region and the subsequent pullback dragged spot prices back closer to the 130.00 psychological mark.

Looking at the broader 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 slide below an ascending trend-line extending from late March could be seen as a fresh trigger for bearish traders.

The negative outlook is reinforced by the fact that technical indicators on hourly charts have just started drifting into bearish territory. Some follow-through selling below the 100-period SMA on the 4-hour chart will reaffirm the bearish bias and pave the way for some meaningful corrective slide for the USD/JPY pair.

Spot prices could then accelerate the fall towards intermediate support near the 129.35 region before eventually dropping to the 129.00 round-figure mark. The downward trajectory could further get extended towards testing the 128.25-128.20 region en-route the 128.00 mark and the 127.70-127.65 support zone.

On the flip side, the 130.70-130.75 region now seems to have emerged as an immediate strong resistance ahead of the 131.00 mark. Some follow-through buying would negate the near-term bearish bias and allow the USD/JPY pair to surpass the recent swing high, around the 131.35 region, and aim to conquer the 132.00 round figure.

USD/JPY 4-hour chart

Key levels to watch