USD/JPY trims gain to 107.00 on profit taking

After jumping to a six-week high level, the USD/JPY pair trimmed some of its strong gains and is currently trading around 107.00 handle. 

During early Asian session, the pair surged to 107.50 region on news that the Japanese government is considering to expand its stimulus package to the tune of 20 trillion yen and is expected to be approved by early August. 

The pair, however, retraced from higher levels as mixed sentiment in Asian equities extended some support to the safe-haven appeal of the Japanese currency.  Moreover, the pull-back from monthly highs could be categorized as a profit-taking move after the pair's relentless rally of nearly 700-pips from monthly low level near 100.50 region. 

Next in focus would be the key ECB monetary policy decision, which has the potential to infuse volatility in the FX market and hence, should provide some immediate momentum play for short-term traders. From the US, market participants will also confront the release of Philly Fed manufacturing index, weekly jobless claims and existing home sale data. 

Technical levels to watch

Below 107.00 handle, the corrective move could get extended towards 106.50 intermediate support ahead of an important support near 106.00 round figure mark. A follow through selling pressure below 106.00 handle is likely to prolong the pull-back, even below 105.00 psychological mark, towards its next major support near 104.70-65 region.

Conversely, on a sustained trade above 107.50 resistance, the pair seems to extend its upward trajectory immediately towards 100-day SMA strong resistance near 108.35-40 region. Above 100-day SMA resistance, the pair seems all set to continue heading higher in the near-term.