USD/JPY: Recovery gains traction as Nikkei jumps higher

A sudden bid-wave caught the USD/JPY last minutes, as the persisting risk conditions got a boost from a renewed rally in the Japanese stocks.

USD/JPY back above 5-DMA at 104.20

The Japanese currency came under fresh selling pressure against its American counterpart in the early European trades, mainly in response to the extension of gains in the Japanese stocks as risk sentiment improved. At the time of writing, USD/JPY jumps +0.31% to fresh session highs of 104.27, while the Nikkei 225 index rallies +1.21% to 16,160.

Meanwhile, the JPY bulls ignored the comments from Japanese PM Abe, noting that top priority is to completely exit deflation and grow the economy. Earlier on the day, the major dropped sharply to almost fresh multi-year lows of 104.56 following the release of BOJ monetary policy meeting minutes.

Next in focus for the major remains the Fed Yellen’s testimony, which begins later today. In the meantime, the Brexit-related news flow will continue to drive market in the day ahead.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 104.84 (Jun 17 & daily high). A break above the last, the major could test 105 (round number). While to the downside, the immediate support is seen at 104 (round number) and below that at 103.56 (Multi-months low).