USD/JPY: Upside capped by 106.30, awaits Fed verdict

The USD/JPY pair revisited daily highs over the last hour, although failed to sustain at higher levels and retreated sharply in tandem with the US dollar index amid easing risk-on trades.

USD/JPY capped by 106.30

The broad based US dollar correction weighed on the USD/JPY pair, sending the rate lower towards 106 handle. The Japanese stocks halted the rebound and trimmed gains, which rescued the JPY bulls somewhat and therefore, dragged USD/JPY from session tops.

At the time of writing, USD/JPY trades +0.04% at 106.14, while the Japanese benchmark, Nikkei 225 trades +0.45% versus +0.73% seen earlier.

The major is expected to trade in a flat-lining in the day ahead, as investors remains cautious and refrain from placing any directional bet ahead of the crucial monetary policy decisions by the Fed and BOJ.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 106.41/42 (5-DMA/ Jun 14 high). A break above the last, the major could test 106.77 (10-DMA). While to the downside, the immediate support is seen at 105.75 (Jun 13 low) and below that at 105.52/50 (May 3 low/ psychological levels).