USDJPY – bears are pausing ahead of US inflation report

The USDJPY edges higher in early trading on Tuesday, after steep fall in past three days pushed the price to the lowest in one month.
Partial profit-taking lifts dollar as traders await today’s key event – release of US inflation report for February.
Economists expect US price growth to remain strong in February, with annualized inflation forecasted to grow by 6.0%, compared to 6.4% increase previous month while core inflation likely increased by 5.5% vs 5.6% in January.
The report comes one week ahead of Fed’s policy meeting and will provide an additional information to the central bank, after last week’s job report showed that the labor market is tight, though with cooling wage inflation.

Inflation remains Fed’s top priority but fresh turbulence in the markets after collapse of two reginal banks and subsequent measures taken by the government to prevent deeper crisis and eroding confidence in the banking system, mark another big problem that the US policymakers face.

Daily chart shows prevailing bearish tone as 14-d momentum remains in negative territory and Monday’s close below significant support at 133.82 (Fibo 38.2% of 127.22/137.90) and within daily cloud (spanned between 130.74 and 133.55) generated bearish signal.
Weak tone is expected to persist as long as Monday’s gap remains unfilled, however bears would need firm break of cracked Fibo support at 132.56 (50% retracement of 127.22/137.90, reinforced by 55DMA) for confirmation.
Pivotal barrier lays at 135.04 (daily Tenkan-sen / last Friday’s closing price) and should cap extended upticks to keep near-term bias with bears.

Conversely, sustained break above 135.04 would sideline bears and shift near-term focus to the upside.

Res: 135.04; 135.38; 135.76; 136.51
Sup: 133.82; 133.55; 133.02; 132.56