USD/JPY off-weekly lows, but stays below 105.00

Having faced rejection at 105 handle, the USD/JPY pair dropped sharply to hit fresh weekly lows near 104.60 region, before recovering some ground on bearish Japanese government growth forecasts.

USD/JPY re-attempts 105?

The tepid-recovery in the dollar-yen pair lost legs at 50-DMA or 105 handle, knocking-off the rate sharply lower towards the mid-point of 104 handle, as the JPY bulls continued to ride higher on the potential Japanese stimulus disappointment, following increased speculation that the government may fail to live up to expectations.

However, the bulls were once again rescued by poor Japanese cabinet forecasts, now pushing USD/JPY back towards 105 barrier. At the time of writing, the USD/JPY pair recovers to 104.85, still down -0.92% on the day, while the Nikkei 225 index drops -1.55% to 16,362, testing lows struck at 16,344 levels.

Markets will continue to digest the latest headlines from PM Abe and JP govt forecasts ahead of the US macro updates due later in the NA session.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 105.79/83 (5 & 10-DMA). A break above the last, the major could test 106 (round number). While to the downside, the immediate support is seen at 104.16 (20-DMA) and below that at 103.89 (Jul 13 low).