USD/JPY: renewed fears ahead of the US inflation numbers sends the Yen tumbling

• Yen tumbles against the USD in Asia markets as risk aversion and inflation fears favour the Greenback.
• The US CPI will be Tuesday's big risk event at 12:30 GMT.

The USD/JPY pair climbed to an Asia session high of 106.84 and is currently settling back to the 106.70 region as risk sentiment sours in the face of the impending US CPI data coupled with the political scandal in the Japanese parliament taking the top off the Yen ahead of the European market session.

The US CPI data that drops on markets at 12:30 GMT today could stoke renewed inflation fears after the jobs report on Friday cooled inflation expectations with lagging wage growth crimping potential for runaway growth. The headline year-on-year CPI figure is forecast to come in at 2.2% versus the previous 2.1% and a beat for the number could spark a fresh 'risk-run' in markets, sending the US Dollar higher.

The Japanese markets are bogged down amidst the parliamentary scandal that sees the Prime Minister, Shinzo Abe, and Finance Minister Taro Aso embattled within their positions in the Japanese government following revelations that Aso had a hand in forged documents involved in the sale of government land to a school operator with ties to Premier Abe's wife.

USD/JPY Technicals

The pair is currently being bolstered by support from the 8-day EMA at 106.50, with further support from March's low of 105.25, while resistance rests at last week's high of 107.05 and the 34 -day EMA at 107.67. H4 charts show the pair constrained by higher lows and lower highs, and a breakout could designate a new trend direction moving forward.