USD/JPY extends gains on stimulus talk, nears hourly 200-MA

Yen selling continues with USD/JPY pair now trading within a touching distance from hourly 200-MA level of 105.89 levels.

Trades above 23.6% Fibo

The pair trades well above 105.175 (23.6% of 125.856-98.787) after having rebounded in the previous session from around 104.19 (23.6% of 121.688-98.787) levels. Yen selling gathered pace in early Asia, although there still skepticism in the markets as to whether BOJ would be able to deliver a major stimulus on Friday.

The latest spike from 105.20 to 105.70 levels could be blamed to Abe’s comments indicating stimulus package would be announced soon and reports the stimulus size is likely to JPY 27 trillion.

Meanwhile, with stocks at record highs, US Fed is seen coming out slightly hawkish later today and that could be adding to the bid tone around USD.

USD/JPY Technical Levels

Acceptance above hourly 50-MA level of 105.89 would expose 106.00 levels. A violation there would expose 106.64 (38.25 of 2011 low-2015 high). On the other hand, a breakdown of support at 105.30 (hourly 50-MA) would expose 105.00 handle, under which losses could be extended to 103.99 (previous day’s low).