USDJPY might be in for a downtrend, as the pair has formed a double top pattern on its hourly time frame. Price has yet to test the neckline around 142.00 and break lower to confirm a reversal.

If that happens, price could tumble by the same height as the chart pattern or around 250 pips. The 100 SMA is above the 200 SMA for now, but the gap between the moving averages has narrowed enough to signal a possible bearish crossover.

Stochastic is also indicating overbought conditions, which means that buyers are exhausted and might let sellers take over. RSI has a bit more room to climb, so USDJPY could follow suit while bullish pressure is in play.

USDJPY got a boost from stronger than expected US CPI earlier this week, as this lifted hopes of a full 1.00% interest rate hike from the FOMC in their meeting later this month. However, the pair dropped on jawboning remarks from Japanese authorities.

The upcoming US retail sales report could bring more volatility for the pair, as a slowdown in consumer spending is eyed. Analysts are expecting the headline figure to show a 0.1% dip after the previous flat reading. Meanwhile, the core version of the report could come in flat after posting a 0.4% gain in the previous month.

Stronger than expected results, however, could bolster Fed tightening hopes and even increase the odds of a larger rate hike. Weak data, on the other hand, might mean downside for the dollar since this could scale back expectations to just a 0.75% rate increase.

Apart from that, more intervention hints from Japanese officials might bring some upside for the yen for the rest of the week. However, many warn that these jawboning comments might not be enough to sustain JPY rallies.