USD/JPY: Sell-off extends in early Europe, nears 106.00

The USD/JPY pair accelerated to the downside below a break of 5-DMA, then located at 106.30, now looking for a test of 106 handle.

USD/JPY: Yen demand on the rise

The bearish pressure behind USD/JPY pair accentuated over the last hour, as the Japanese stocks erased most gains towards closing hours, souring sentiment across the markets. At the time of writing, the USD/JPY pair trades almost unchanged near session lows of 106.11, while the Nikkei 225 index trades flat at 16,630 levels versus +0.48% seen previously.

Moreover, the greenback embarks upon a minor-corrective mode versus its major peers, following last week rally to four-month tops, sending the USD index in the red around 97.40 levels, down from peaks of 97.62.

Nothing of note in the day ahead and hence, markets now await the BOJ and Fed policy decisions due later this week, ahead of the US consumer confidence and new home sales lined up for release tomorrow.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 106.72 (daily high). A break above the last, the major could test 107.29 (100-DMA). While to the downside, the immediate support is seen at 106 (round figure) and below that at 105.13 (50-DMA).