Since the end of April trading, the pair has been in a "will it, will it not?" situation when it comes to breaking the 130.00 handle.
And trading this week is no different as the Monday jump failed to hold with the 28 April daily resistance at 131.25 pushing the pair back lower. That came alongside a fall in Treasury yields, with 10-year yields having dropped from 3.20% to 2.93% currently.
In turn, that has seen USD/JPY also trip back below 130.00 today with the near-term chart highlighting some added control by sellers ahead of the US CPI report release:
Going into the key risk event, the bond market is in charge of trading sentiment for the pair. The key narrative to watch is that of 'peak inflation' and how that plays out will have repercussions for yields and the dollar as outlined here.
If we do see markets stick with a 'peak inflation' trade in the aftermath today, then perhaps the dollar may have also reached a short-term peak as well against the yen. Last week's lows around 128.62-75 will be key as a break below that could lend to a more decisive break lower in USD/JPY as sentiment turns.
