USD/JPY surges to 3-week high on expectations of additional stimulus

The Japanese Yen continues to sell-off on expectations of additional fiscal stimulus, with the USD/JPY pair surging past post-Brexit recovery high to currently trade at 3-week high level of 103.50.

Following Sunday’s upper house election victory for the ruling coalition, Japanese PM Abe’s confirmation of additional stimulus on Monday provided the much needed respite for the USD/JPY bulls. Following the announcement, the pair extended its recovery momentum and rose to a six-day high level. 

The Japanese government is expected to announce the stimulus measures, as early as today. 

Moreover, the prevalent global risk-on sentiment is also denting the safe-haven appeal of the Japanese currency and is further contributing to the ongoing short-covering led sharp recovery for the major.

Technical levels to watch

On a sustained trade above 103.40-50 3-week high resistance, the pair could immediately dart towards 103.90 intermediate resistance before heading towards its next major resistance near 104.70-75 zone. On the downside, weakness below 103.00 handle, and a subsequent weakness through session low support near 102.50-45 area, now seems to negate prospects of any further bullish momentum and drag the pair back towards 101.50-40 support area.