USD/JPY: A knee-jerk spike on JP stimulus news fades near 104.75

A fresh bout of selling interest caught the Japanese currency in the mid-European session amid renewed stimulus chatter, bolstering the recovery in the USD/JPY pair to near 104.75 region, before running through fresh offers last minutes.

USD/JPY capped by 104.75

The reports of Japan mulling over JPY 10tln fiscal stimulus combined with a dozen of headlines from the Japanese officials crossing wires, triggered fresh sell-off in the yen, sending it lower against the greenback to session lows of 104.73. However, the JPY bulls were quickly rescued by poor risk environment and hence, dragged USD/JPY slightly lower near 104.60, where it now wavers.  

Moreover, the yen also came under pressure after the Japan’s cabinet office cut its forecasts for growth and inflation as the government considers a stimulus package to support the ailing economy.

Going forward, markets will continue to digest the headlines from the Japanese authorities amid a data-quiet American session ahead.

USD/JPY Technical levels to watch

In terms of technicals , the immediate resistance is located at 104.88 (daily high). A break above the last, the major could test 103.12 (daily S1). While to the downside, the immediate support is seen at 102.75 (20-DMA) and below that at 102.58 (5-DMA).