USD/JPY bulls in full control, soars to 104.00 neighborhood

Maintaining its strong bid tone, the USD/JPY pair managed to recover from early European session dip below 103.00 handle and jumped to a fresh 3-week high level. Extending its bullish momentum, the pair has now moved within striking distance of 104.00 handle.

Markets were initially disappointed after announcement from Japanese economic minister failed to provide clarity on the size of the stimulus package and also confirmed a delay in implementation to end-July. 

The pair, however, got a fresh boost after Reuters reported that Japanese government slashed its 2016 CPI estimates to 0.4% from 1.2% projected in Jan. and also cut its 2016 GDP forecast to 0.9% from 1.7% previously estimated. 

Lower revision of the government estimates further fuel expectations of additional stimulus measures in order to support fragile economy and combat low inflation, triggering a bullish spike in the USD/JPY major.

Technical levels to watch

From current level 104.00 handle remains immediate hurdle to clear, above which the pair seems all set to extend its bullish trajectory towards its next major resistance near 104.70-75 region. Meanwhile on the downside, 103.50-40 area now turns immediate support to defend, which if broken could force the pair back towards 103.00 handle.