The USD/JPY pair edges higher for the fourth successive day on Wednesday and climbs to a one-week high, around mid-135.00s during the early European session.

The crucial US CPI report will play a key role in influencing market expectations about the Fed's next policy move. This, in turn, should drive the USD demand in the near term and help investors to determine the next leg of a directional move for the USD/JPY pair. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution for bullish traders and before positioning for any further intraday appreciating move.

Sluggish MACD signals and a steady RSI (14) line hint at the USD/JPY pair’s further easing. However, a clear downside break of the stated wedge’s lower line, close to 135.00 by the press time, will confirm the wedge formation suggesting a theoretical fall toward the 133.00 round figure.

Though, the 100-bar Simple Moving Average (SMA) and an upward-sloping support line from April 13, respectively near 134.80 and 134.00, can prod the USD/JPY bears afterward.

It’s worth observing that the Yen pair’s run-up after crossing the 200-SMA level during mid-April highlights the stated key moving average, around 133.65 at the latest, as a major challenge for the bears.

Meanwhile, USD/JPY recovery may find multiple hurdles near 135.50, a break of which could direct the pair towards the stated wedge’s top line, near 135.90 as we write.

In a case where the Yen pair remains firmer past 135.90, the 136.00 round figure may act as an extra check for the bulls before pushing them for another battle with the 138.00 hurdle comprising tops marked in March and May 2023.

135.00 can act as a strong support for CPI release

May 10 2023