USD/JPY recovers to move back above 106.00 handle

Falling a sudden plunge to sub-105.50 level, the USD/JPY pair has managed to recover some of its lost ground and is currently trading back above 106.00 level. 

The pair witnessed intense selling pressure after BOJ Governor Kuroda’s comments negated the possibilities of further monetary easing by the central bank later during this month. Kuroda, however, showed readiness to add stimulus, if required, to eliminate deflationary pressure and support fragile economy.

Next in focus would be ECB monetary policy decision, which would add volatility in the FX market and eventually drive the USD/JPY major.

On the economic data front, traders will be looking for US releases, which includes - Philly Fed Manufacturing Index, weekly jobless claims and existing home sales data, later during NA session.

Technical levels to watch

Should the pair resume its weakening trend and drop back below 106.00 handle, it seems to break through support near 105.50-40 region and head continue drifting lower towards its next major support near 104.70-65 region.

On the flip side, momentum above 106.90-107.00 immediate resistance might continue to face strong resistance at 4-week high level near 107.50 region. A decisive strength above 107.50 now seems to assist the pair towards its next major resistance at 100-day SMA near 108.35-40 region.